The Effect of Foster-Care Payment Levels on the Number of Foster Children Given Homes

One possible way to increase the number of available foster homes is to raise the level of payments to foster parents. This article estimates the effect of the payment level on the supply of potential homes. The relationship is estimated on data from the various states. One method is a simple cross-sectional comparison of the states. Another, and more satisfactory, method is an examination of the changes over time in the various states. There is rough agreement in the results of the two methods, suggesting that a given percentage change in payment level would result in a percentage change in the supply of homes somewhere between half as large and fully as large-for example, a 5-10 percent change in available homes in response to a 10 percent change in payment level.