Using Subsidies to Promote the Adoption of Children from Foster Care


Since 1978 the federal government has implemented a variety of programs to promote the adoption of children from foster care. A key part of these programs has been the use of subsidies to lower the cost of adopting and parenting children who have been in foster care. Although subsidies are a key part of federal policy, there has been little empirical research on the effect of subsidies on adoption rates. This paper uses data from the Adoption and Foster Care Analysis and Reporting System to estimate the impact of subsidy rates on adoption rates. Subsidies to families have a positive and statistically significant effect on adoption rates.

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Fig. 1


  1. 1.

    The literature reviewed by Triseliotis (2002) shows that adoptions at young ages have the best outcomes, but because the family resources available at adolescence improve later life chances (Burgess, Gardiner, and Propper 2006), late adoptions may have considerable benefits as well.

  2. 2.

    Many federal laws affect child welfare systems in the states. For example, the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 limited reimbursements to states for some foster care and adoption expenses. For a discussion of the effects of PRWORA on families of children with special needs, see LeRoy and Johnson (2002); for its effect on young mothers, see Miranne and Young (2002). For a state-level analysis of family leave policy, see Garand and Monroe (1995).

  3. 3.

    Respectively 15%, 26%, and 42%; author’s calculations from 2002 Adoption Attitudes Survey. The author thanks Rita Soronen of the Dave Thomas Foundation and Jon Siegel of Harris Interactive for their assistance in obtaining the 2002 Adoption Attitudes Survey. Also see Chandra, Abma, Maza, and Bachrach (1999).

  4. 4.

    The simplification of perfect substitutes is a familiar feature of choice-between-varieties models, but is not crucial to the argument.

  5. 5.

    Calculation of author using the Adoption and Foster Care Analysis and Reporting System (AFCARS) public use adoption files.

  6. 6.

    See Stolley (1993) for details about early adoption data. See Maza (1999) and Hansen and Hansen (2006) for a comparison of AFCARS and other data. The Multi-state Foster Care Data Archive (Wulczyn 2002) contains children’s case histories for a few states.

  7. 7.

    The demographic measure of the adoption rate was introduced by Selman (2002). In the social work literature, the adoption rate is defined as the percentage of the children in foster care who exit through adoption. Considering adoptions relative to the foster care population is not appropriate for the study of demand, but it is of more relevance to the study of incentives within the child welfare system.

  8. 8.

    Archives were made available to the author by the North American Council on Adoptable Children.

  9. 9.

    This idea is contradicted by recent evidence on minority altruism in broader contexts (Cao 2006).

  10. 10.

    Most recently, Sen. John D. Rockefeller (D-WV) introduced S. 1539 (a bill to amend part E of title IV of the Social Security Act to promote the adoption of children with special needs) on July 28, 2005. Rep. Benjamin Cardin (D-MD) introduced H.R. 1534 (Child Protective Services Improvement Act) on April 1, 2003. Rep. Herger introduced H.R. 4856 (Child Safety, Adoption, and Family Enhancement Act) on July 19, 2004.


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The data used here were made available by the National Data Archive on Child Abuse and Neglect, Cornell University, Ithaca, NY, and have been used with permission. Data from the AFCARS were collected by the Children’s Bureau. Funding for AFCARS was provided by the Children’s Bureau, Administration on Children, Youth and Families, Administration for Children and Families, U.S. Dept. of Health and Human Services. The collector of the original data, the funder, the Archive, Cornell University and their agents or employees bear no responsibility for the analysis or interpretation presented here.

Financial support for this research was provided through the National Institutes of Health, NICHD (Grant No. R03-HD045342-01); through the Mellon Fund, College of Arts and Sciences, American University; and through the Summer Research Institute, National Data Archive on Child Abuse and Neglect, New York State College of Human Ecology, Cornell University. The author thanks the staff at NDACAN for their assistance.

Thanks go to Jeremy Atack, Richard Barth, David Carr, Eliane Catilina, Georgia Deoudes, Robert Feinberg, Peter Gibbs, Brad Hansen, Rita Simon, John Willoughby, anonymous reviewers, the editor, and participants in the 2003 Eastern Economic Association Annual Meetings for helpful comments and discussions. Research assistance was provided by Renata Kochut.

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Correspondence to Mary Eschelbach Hansen.

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Hansen, M.E. Using Subsidies to Promote the Adoption of Children from Foster Care. J Fam Econ Iss 28, 377–393 (2007).

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  • Adoption
  • Child welfare
  • Foster care
  • Policy
  • Subsidies