Privatization and subsidization of adoption services from foster care: Empirical evidence

This paper analyzes empirical differences in adoption services of public and private agencies. The empirical investigation includes cross-sectional time series aggregated data for the 50 states within the United States from 1996 to 2010 with detailed statistical analysis of the period from 2000 through 2010 for which consistent and comprehensive data exists. Under private agencies, only 11.6 months elapse from the time the courts terminate the natural parents' custody until the child is adopted, while with public agencies the same process lasts for 16 months. Furthermore, during the decade from 1996 to 2006 private agencies completed more adoptions than public agencies. However, the performance gap in favor of private agencies was eliminated in 2006 and in the following years. The results suggest that privatization of adoption of young and healthy children did not show an advantage for private services. However, transitioning adoption services to private agencies for older children or children with complex special needs, improves the adoption services compared with those of public agencies. Subsidization especially improves the adoption of older children and of all children with special needs while it appears to be statistically insignificant or implied as unnecessary for healthy babies.