Adoption Subsidies and Placement Outcomes for Children in Foster Care

More than 400,000 children in the United States are currently in foster care, many of whom are at risk for long-lasting emotional and health problems. The Adoption Assistance and Child Welfare Act of 1980 provided federal funds for monthly adoption subsidies designed to promote adoptions of special-needs children and children in foster care. Using data from the Adoption and Foster Care Analysis and Reporting Systems, I find that the number of adoptions increases when children become subsidy-eligible, and that most of the increase is from adoptions by foster parents. Conditional on adoption, subsidy eligibility decreases time spent in foster care.