The Economics of Adoption of Children from Foster Care

Federal initiatives since 1996 have intensified the efforts of states to achieve adoption for children in foster care with the case goal of adoption. For many waiting children, the path to adoption is long. We offer an economic analysis of adoption from foster care, with an emphasis on the reasons why it may be so difficult to achieve the goal of adoption for all waiting children. We then estimate the determinants of adoptions from foster care across the states using data for fiscal years 1996 and 1997. Adoption assistance subsidy rates stand out as the most important determinant of adoptions from foster care, followed by utilization of alternatives such as intercountry adoption. Adoptive matching on the basis of race does not appear to prevent adoptions from foster care in the aggregate, leaving flaws in the matching process (such as a lack of information and difficulty utilizing the ICPC) as a primary reason why children wait.