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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.
