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The Effect of Paying Parents to Adopt: Evidence from Minnesota's Foster-Care System

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  • Bishop Kelly C.
  • Mac Donald Diana E.

Abstract

Aimed at increasing the adoption rate of older children, Minnesota's 2015 Northstar Care Program eliminated the adoption penalty (the decrease in fostering-based financial transfers associated with adoption) for children aged six and older, while maintaining it for children under age six. Using a difference-in-differences estimation strategy that controls for a rich set of covariates, we find that parents responded positively to this change in direct financial payments; the annual adoption rate of older foster children aged six to eleven increased by approximately 7 percentage points (22% at the mean) as a result of the program. We additionally find evidence of strategic adoption behavior as the adoption rate of younger children temporarily increased by 11 percentage points (26% at the mean) in the year prior to the program's implementation.

Suggested Citation

  • Bishop Kelly C. & Mac Donald Diana E., 2022. "The Effect of Paying Parents to Adopt: Evidence from Minnesota's Foster-Care System," Working Papers 2022-01, Banco de México.
    • Handle: RePEc:bdm:wpaper:2022-01
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    File URL: https://www.banxico.org.mx/publications-and-press/banco-de-mexico-working-papers/%7BE58152FA-04F0-4F08-AA43-0AF1FE654599%7D.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Family Policy; Government Transfers; Adoption; Foster Care;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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