Are Foster Children Made Better Off by Informal Fostering Arrangements?

Abstract

Research on the effects of informal child fostering arrangements on the welfare of the children involved highlights cross-country disparities. Why may there be differences across countries with regard to the effects of informal child fostering arrangements? If in all countries reporting a high incidence of foster children Hamilton’s rule applies, then these cross-country differences are puzzling. Our model of child fostering arrangements builds on the fact that a child’s school performance is jointly influenced by his nutrition status and the time he has available at home to develop his learning skills and prepare for national school tests. Given this feature of academic performance, fostering out may become a poor parent’s best option for enhancing his child’s academic excellence, by trading off study time for better nutrition. We show that child fostering arrangements embedding this human capital motive for out-fostering make the foster child better off when nutrition is paramount to a child’s ability to achieve academic excellence.