Research Watch

US study finds that subsidies lead to increased adoptions from foster care

Year of Publication
Reviewed By
Claudia Lahaie & Anne-Marie Piché

Eschelbach Hansen, Mary and Hansen, Bradley, A. (2005, September). The Economics of the Adoption of Children from Foster Care (Working Paper No. 2005-10). Washington D.C.: American University, Department of Economics.


Since 1996, the American federal government has intensified its efforts in helping the states to facilitate the path to adoption of children from foster care. Using data from the 1996-1997 Adoption and Foster Care Analysis and Reporting System (ACFARS) reports, this study examined the relationship between adoption rates from foster care and a range of state-level adoption policies. Subsidy amount was the only policy variable that was strongly positively correlated with adoptions from foster care, explaining 25% of variation in adoption rates across states. In contrast, overall child welfare expenditures had no impact on rates of adoption from foster care. The study also found no evidence of a decrease in adoptions resulting from race matching adoption requirements. Finally, the authors also found that there is a negative relationship between adoption from foster care and intercountry adoption. Policies going mainly to intercountry adoption may reduce, at the margin, the number of families considering adoption from foster care.

Methodological Notes

The study used a novel consumer behavior theory model to examine demand for adoption services for waiting children. Costs were calculated on the basis of direct financial expenditures and a number of non-monetary costs, such as time to fill out paper work, time to meet with the social worker, time spent waiting for adoptive placement. Regression analyses were used to examine the effect of a number of policy variables on adoption rates. The findings provide strong support for using adoption subsidies (25% of the variation in adoption for foster care). When adding all of the other demographic variables, the model explains 68% of variation in adoption for foster care. To explain the 32% remaining variation, the authors are planning to add institutional details in future research such as the use of databases for matching, the use of adoption specialists, the use of child-specific recruitment, and demonstration project funding. A more in-depth analysis of the reasons why families might wait, such as the unwillingness or inability of a family to accept placement of a child with special needs, should also be considered in future research.