Downward Spiral: The Impact of Foster Care Placement on Paternal Public Dependency

Peter Fallesen, Rockwool Foundation Research Unit

This study analyzes the effect of having a child placed in foster care on fathers' welfare dependency. Recent research suggests that the stigma of having a child placed in foster care has a negative impact on fathers' sense of identity, but so far no research has analyzed whether this negative psychological impact also affects fathers' labor supply. Using population data from Denmark that include all fathers who had a firstborn child placed in foster care in the period 1984-2005, this study suggests that the stigma of having a child placed in foster care is associated with a nontrivial increase in fathers' dependency on welfare benefits. This result persists in fixed effect and selection models that control for unobserved characteristics of fathers leading them to having both a high risk of having a child placed in foster care and a high risk of being on welfare benefits.