Publisher:
[Banco de México], [Ciudad de México, México]
In the United States, prospective foster parents must become licensed by a child welfare agency before a foster child can be placed in their care. This paper contributes by developing a theoretical matching model to study the optimal menu of licenses...
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ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 192
Inter-library loan:
No inter-library loan
In the United States, prospective foster parents must become licensed by a child welfare agency before a foster child can be placed in their care. This paper contributes by developing a theoretical matching model to study the optimal menu of licenses designed to screen foster parents. We construct a two-sided matching model with heterogeneous agents, adverse selection, search frictions, and a designer who coordinates match formation through a menu of contracts. We focus on incentive compatible contracts, examine optimal allocations and transfers, and analyze equilibrium sorting patterns. There are three main results: (i) optimal allocation calls for a segregation of the market, (ii) a simple transfer schedule does the job, (iii) complementarities do not ensure that Positive Assortative Matching (PAM) will arise in equilibrium, thus we provide an additional condition that guarantees it. Our results suggests that the menu of licenses used in practice, exhibits some of the properties of the optimal solution. However, the menu might not be reaching its screening objective.
Publisher:
[Banco de México], [Ciudad de México, México]
This paper studies the two-sided dynamic matching problem that occurs in the US foster care system. In this market, foster parents and foster children can form reversible matches, which may separate, continue in their reversible state, or transition...
more
ZBW - Leibniz-Informationszentrum Wirtschaft, Standort Kiel
Signature:
DS 192
Inter-library loan:
No inter-library loan
This paper studies the two-sided dynamic matching problem that occurs in the US foster care system. In this market, foster parents and foster children can form reversible matches, which may separate, continue in their reversible state, or transition to permanency via adoption. I first present an empirical analysis that yields four new facts. Thereafter, I develop a two-sided search and matching model used to rationalize the empirical facts and carry out predictions regarding match quality. Interestingly, I find that match separation plays a crucial role in adoption by influencing the incentives of foster parents to adopt. Due to the presence of a financial penalty on adoption, parents accept the penalty in exchange for eliminating the likelihood that the child separates from the match in the future. Moreover, I show that the adoption penalty not only exacerbates the intrinsic disadvantage (being less preferred by foster parents) faced by children with a disability, but it also creates incentives for highquality matches to not transit to adoption.
