Department of Labor Logo United States Department of Labor
Dot gov

The .gov means it's official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you're on a federal government site.


The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Beyond BLS

Beyond BLS briefly summarizes articles, reports, working papers, and other works published outside BLS on broad topics of interest to MLR readers.

November 2022

An economic look at child protection policies of the foster care system

Summary written by: Charlotte M. Irby

We know that foster care is the care that the government provides to protect those who cannot protect themselves, particularly children. But what does the term “foster care” really mean?

To many children in the United States, the term means fear, loss, and separation—a disconnect from all that they know. To the government, however, foster care means placing neglected or abused children in homes that will protect them with the ultimate goal of returning them to their families—a “protect and preserve” adage. However, as Anthony Bald, Joseph J. Doyle Jr., Max Gross, and Brian Jacob point out in “Economics of foster care” (National Bureau of Economic Research, Working Paper 29906, April 2022), these children grow up with higher depression rates and lower educational outcomes than children not placed in foster care. In their paper, Bald and his colleagues look at the child welfare system as a whole to determine whether economic research may benefit its policies that protect children.

Bald and coauthors breakdown their analysis into three primary areas: (1) the practices of the child welfare system—how it evaluates, investigates, and intervenes on behalf of the child; (2) the demand (need) of foster care; and (3) the supply (source) of foster care. They examine several local and state child welfare policies and their processes, in the 2000s. And then they look at the demand and supply of foster care during this period and how these areas can be improved.

Within the child welfare system is the Child Protective Services (CPS), the agency that assesses and investigates possible child abuse. Bald and his colleagues observe that at the end of 2019, CPS placed over 400,000 children in foster care (0.6 percent of the total U.S. child population). The main reasons for placement include maltreatment and neglect. The authors list several types of foster care placements: kinship (placed in a home of a relative), unrelated foster family, and congregate, such as a group home or an institution. Of these children, CPS placed nearly half in unrelated foster families, staying an average of 15 months.

Bald and his coauthors find that the child welfare policies that CPS follow in addressing possible child abuse or neglect vary substantially between state and local governments and within each authority. They note that some of these factors that cause this variance are number of children who must be placed, number of available placements, costs of maintaining placements, and racial disparities.

As for the demand and supply of foster care, Bald and his colleagues’ analysis shows that these elements are also affected by government policies, both state and local that often vary from one to the other. Demand is affected by the level of abuse reported and the policies that dictate how CPS should respond. For supply, policies must cover assessing and obtaining foster care families, licensing homes, and selecting the right type of foster care.

Bald and his coauthors surmise that the foster care system policies and practices that direct the protection and preservation of children in the United States are inconsistent. They recommend that economic research is needed to improve the system’s policies for the “wellbeing” of the children and their families. To address foster care demand, they recommend programs to help the welfare system understand why children are being mistreated and solutions to help stop the mistreatment. And for supply of foster care, the authors propose better quality of foster care through more modern recruitment processes. With these types of improvements and the policies that institute them, they find that economic research can protect children.