Who Gets a Family? The Consequences of Family and Congregate Care Allocation for Child Outcomes

Hundreds of thousands of children grow up in the US foster care system every year and are at high risk of experiencing negative outcomes such as incarceration and homelessness. This paper documents how the placement of foster children into families rather than congregate care improves their outcomes, using the exits of other children from families as an instrument for their placement setting. Policies that change which children are matched to families can achieve a large percentage of the gains from policies that add families to the foster care system due to heterogeneity in treatment effects. (JEL J12, J13, J18, K42)