Parental Substance Use and Foster Care: Evidence from Two Methamphetamine Supply Shocks

By Cunningham, Scott; Finlay, Keith | Economic Inquiry, January 2013 | Go to article overview

Parental Substance Use and Foster Care: Evidence from Two Methamphetamine Supply Shocks


Cunningham, Scott, Finlay, Keith, Economic Inquiry


I. INTRODUCTION

From 1986 to 2010, the U.S. foster care population increased from approximately 280,000 to 408,000--a rise of over 45% due primarily to increased admissions in the 1980s and 1990s (U.S. DHHS 1999a, 2006a, 2006b, 2011). This increase in the foster care population has generated significant monetary and non-monetary costs. Out of $22.2 billion spent in 2002 at federal, state, and local levels on child welfare programs, about $10 billion was allocated to out-of-home placements for children, including foster care and group homes (Scarbella et al. 2004). The rise in foster care enrollments could lead to large long-term social costs. Children in foster care are more likely to have behavioral, psychological, and physical health problems. Although many of these problems are believed to result from the circumstances that led to placement in foster care, recent research suggests that the foster care system aggravates these problems (Doyle 2007, 2008).

Given the growing costs of foster care, it is important to understand why more children are entering the foster care system, so that policymakers may know where resources for mediation are best directed. This paper explores the effect of use of a particular narcotic, methamphetamine, on foster care admissions. A body of media reports and child welfare publications links methamphetamine (meth) use with foster care admissions (see Nicosia et al. 2009). While research has explored a broad set of explanatory factors, it is difficult to isolate the proximate effect of any particular variable on foster care because of omitted variable bias (Swann and Sylvester 2006).

To measure the effect of meth use on foster care admissions, we collect monthly data on foster care admissions and exits, meth drug treatment admissions as a proxy for the number of meth users, retail meth prices, and a variety of other potentially relevant factors for U.S. states from January 1995 to December 1999 and estimate instrumental variables models of the effect of meth on foster care admissions. The instrumental variable is the deviations in the real price of a pure gram of meth from national trends caused by large federal supply interdictions in 1995 and 1997 that created temporary shortages of critical inputs--chemical precursors--used in production. With this instrumental variable strategy, we find that a 1% increase in white meth use (proxied by white self-admitted meth treatment admissions) is associated with a 1.5% increase in white foster care admissions. (1)

We further investigate the routes that children take into foster care, including parental incarceration, child neglect, child abuse, and parental drug use. Our evidence is consistent with a positive, elastic relationship between meth use and child neglect and parental child abuse of 1.03 and 1.49, respectively. In one specification, parental meth use caused a decrease in foster care enrollments due to parental incarceration. This last result is not robust across specifications, but may merit further research.

We also contribute more generally to literature on the effects of meth. Dobkin and Nicosia (2009) examine the effects of meth on public health outcomes and crime in California. In a similar identification strategy that uses only the 1995 interdiction, Dobkin and Nicosia estimate that meth-related hospital and treatment admissions fell 50% and 35%, respectively, but find no statistically significant relationship between meth-related hospital admissions and crime. We build upon this strategy by using meth treatment admissions as the explanatory variable, both the 1995 ephedrine and 1997 pseudoephedrine regulations for identification, and a sample with national coverage. We do find significant effects of meth use on foster care.

The paper is organized as follows. Section II gives an overview of relevant details of foster care policy and the institution of foster care, the role of parental drug use in child maltreatment and foster care admissions, and the two federal interventions in 1995 and 1997 that increased the scarcity of two key meth precursors. …

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