Child Protection and Child Outcomes: Measuring the Effects of Foster Care Forthcoming, American Economic Review

The child welfare system investigates over 2 million children each year for parental abuse or neglect, yet little is known about the effects of removing children from home and placing them in foster care. Long-term outcomes are rarely observed, and children placed in foster care likely differ from those not placed, making comparisons difficult. This paper uses the removal tendency of investigators as an instrumental variable to identify causal effects of foster care placement on a range of outcomes for school-age children and youth. A rotational assignment process effectively randomizes families to these investigators. The results suggest that children assigned to investigators with higher removal rates are more likely to be placed in foster care themselves, and they have higher delinquency rates, teen birth rates, and lower earnings. Large marginal treatment effect estimates suggest caution in the interpretation, but the results suggest that children on the margin of placement tend to have better outcomes when they remain at home, especially for older children. (JEL I38, H75)