Over 500,000 children are in the U.S. foster care system. More than 125,000 of these children are waiting to be adopted in any given year. Studies have shown that children who have spent time in foster care have much worse long-run outcomes: higher rates of teen motherhood, drug-use, juvenile delinquency, and unemployment. These children are two to three times more likely to enter the criminal justice system as adults. Thus having them adopted out of foster care greatly mitigates the problem. In this study, we examine how globalization and technological changes might have adverse consequences on children in the US foster care system. We compiled data (1998 to 2009) to examine whether the spurt in international adoptions and Assisted Reproductive Technology (ART) births has affected domestic adoptions from US foster care. Using a novel identification strategy, we estimate that every three international adoptions displaced one foster adoption, essentially affecting about 60,000 foster children in the last decade alone. On the contrary, we find that ART births do not affect domestic adoptions from foster care. The large displacement of domestic adoptions from foster care and consequent negative externalities (crime, unemployment) suggests that the current tax-rebate, adoption subsidy and related policies need to be reexamined.
Anand Murugesan is a Ph.D. candidate in Agricultural and Resource Economics at the University of Maryland, College Park. Anand was born in Bangalore, India. His primary research interests are in economic development, health, institutional and behavioral economics. One stream of his research examines the impact of globalization and technological changes on family formation and outcomes of children in foster care. In another line of work on the microeconomics in developing societies, Anand investigates social, moral, and economic influences on household behavior, such as choice of amenities and health. He studied how legal institutions and social norms regulate information available about marriage partners' health, affecting the dynamics of disease (HIV) transmission. Recently he has been conducting experiments in the U.S. and India to understand social contagion of dishonesty in the context of corruption. Anand, an alumnus of Complex Systems Summer School at Santa Fe Institute, naturally inclines toward interdisciplinary research. Besides work, he enjoys running, hiking and cooking for friends.