Principal Investigator Joseph Doyle
Project Start Date August 2003
We estimate the impact of changes in foster care subsidies on the quantity of foster care services provided. We develop a simple model of the foster care market and estimate a supply function by exploiting variation in subsidies and foster care populations across thirty-seven states and the years 1987-1995. One innovation in our approach is that we allow for the possibility that states do not set market clearing rates. Our results show that states may be able to use economic incentives to attract foster parents in order to remedy what has been labeled a foster parent shortage especially in states with high demand.