More Money, Fewer Problems? The Effect of Foster Care Payments on Children’s Quality of Care

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Presenter: Anna Chorniy | Northwestern Feinberg

Co-author: Christopher Mills | Princeton University

Abstract

In the US, states provide financial support to foster parents. In the absence of a nation-wide requirements maintenance payments vary dramatically geographically and over time. Theoretically ambiguous, the question of the effect of these payments on foster parent participation and children well-being has been stirring policy debates for decades. In this empirical paper, we combine three longitudinal multi-state data sets: collected state-year payment rates; Adoption and Foster Care Analysis and Reporting System (AFCARS), and Medicaid records. We leverage plausibly exogenous variation in the timing of foster care payment changes and rely on the event study and difference-in-difference event study analyses with continuous treatment. In contrast to the prior literature, we find that maintenance payments have only a modest effect on whether a child is placed with a family as opposed to group-based care. We also find little evidence of improvements in multiple measures of child well-being and conclude that we can rule out any large positive impact of an increase in foster care subsidies on children’s placement, healthcare utilization, and health outcomes. Our findings highlight the limitations of payments to caregivers as a cost-effective tool for improving children’s quality of care.

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Important note: This is a hybrid event and will also require a password to access the online seminar. Please email the event organiser – Dave Mc Manamon (dave.mcmanamon@sydney.edu.au) for access.