Economics of Foster Care

Abstract

Foster care provides substitute living arrangements to protect maltreated children. The practice is remarkably common: it is estimated that 5 percent of children in the United States are placed in foster care at some point during childhood. This paper describes the main tradeoffs in child welfare policy and provides background on policy and practice most in need of rigorous evidence. Trends include efforts to prevent foster care on the demand side and to improve foster home recruitment on the supply side. With increasing data availability and a growing interest in evidence-based practices, there are opportunities for economic research to inform policies that protect vulnerable children.

Charting the 21st Century Rise of For-Profit Residential Child Care

“…Whether or not the policy aim is to move away from for-profit residential child care (e.g., Wales and Scotland) or to try to work better with it (e.g., England), the current prevalence of for-profit provision in GB as well as some other countries of the Global North means that governments will have to continue work with for-profit providers in the short to medium term. Within such a framework, the literature suggests multiple ways for public authorities to better direct for-profit provision, including the therapeutic content, overall models, and particular treatments in residential childcare-from high-level regulation and guidance to local, municipal-level specification of procurement criteria and performancebased contracts [79,80]. State licensing-a key instrument of controlling for-profit care providers-varies greatly between countries-in terms of licensing models, as well as the extent of intervention post-license [81].…”

“…The potential of state licensing may often remain underutilized-for example, where it does not focus on major aspects of provision, such as staffing levels, a child's contacts with their biological family, schooling, and health support-and thus may currently be a missed opportunity to ensure the quality of care [82]. Performance-based contracts may also effectively incorporate various quality dimensions including those concerning safety, permanency of care, child and family wellbeing, and the educational attainment and criminal records of children and young people who are being provided with care [79].…”

Family Bargaining with Altruism

“…Family "insurance" extends beyond marriage and beyond parent-child interactions and includes the provision of foster care and adoption by grandparents, uncles, and aunts of their orphaned grandchildren, nieces, and nephews; see Bald, et al, (2022) andBrahm (2021). Some states now use subsidies to incentivize the provision of kin foster care and kin adoptions, but the prevalence of kin foster care and adoption before government subsidization is evidence of altruism.…”

Protocol: Interventions aimed at preventing out‐of‐home placement of children: A systematic review

“…Therefore, one of the goals of the present review is to provide knowledge about what interventions effectively prevent out‐of‐home placements. Such knowledge is of particular importance in countries like the United States, where the Family First Prevention Services Act of 2019 recently made it possible for states to use federal funding on services designed to prevent out‐of‐home placement (Bald, Doyle, et al, 2022 ).…”