The Economics of Adoption

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therub
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The Economics of Adoption

Post by therub »

I thought I would write a bit about the financial aspects of adoption, having recently finished an international adoption.

We started our adoption process in early 2009 by visiting agencies and doing a lot of independent research. We knew it was going to be expensive because of anecdotal stories from friends and family, but we were surprised at how much the numbers varied depending on country. The funny thing about the adoption "business" is that it is a market just like any other: countries with more demand cost more, while less popular countries cost less. Likewise older and "special needs" children are often less expensive than young healthy children. It is difficult to talk about children as a commodity, but adoption is a market whose purpose is to match kids with families.

We chose Taiwan not based on cost, but based on a number of factors such as: country restrictions and requirements, cultural familiarity, wait times, and others. Happily, it seems to be in the middle of the road in terms of cost.

Early on we decided that it would be more fulfilling, more economical, and more rewarding to adopt two to three children instead of one. We knew if we adopted one, we would be back doing the whole process over again within two years. It is a very lengthy process and as a side benefit, this decision helped keep it affordable. We ended up being matched up with two young brothers, who are now home with us.

Our costs broke down like this:
Local agency fees: $5,550
International agency fees and Taiwan fees: $23,800
Governmental fees (visas, background studies, courts, etc): $2,291
Travel costs (hotel and flights): $5,427
Total cost: $37,068

37k is a lot of money to come up with. Fortunately it was spread out over 3 and a half years. However, the costs are only one side of the equation. My fortune 50 employer has a $2,000 per adopted child tax free reimbursement and this is common at mega corps. The biggest benefit was from the IRS in the form of a $13,360 tax credit per child. This used to be a tax deduction, but it became a credit a couple years ago (I believe 2010). It is renewed annually so it is not safe to depend on it.

Credits:
Employer adoption credit: $4,000
IRS adoption credit: $26,720
Total credit: $30,720

Note that most of the expenses are per-adoption while the credits are per-child. Adopting a sibling group is not a decision that should be made for financial reasons, but for us it made a big difference financially.

Total expenses for adopting our two kids: $6,348. Basically, we paid for the travel and the rest was subsidized by my company and the US tax payer (but let's not get political).

I'm curious if these numbers are a surprise to anyone. I know I would have been surprised 4 years ago.
Fees are the rub.
HongKonger
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Re: The Economics of Adoption

Post by HongKonger »

Congratulations on your new family. What a loving thing to do :)
bhtomj
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Re: The Economics of Adoption

Post by bhtomj »

Your numbers seem similar to ours. My wife and I adopted our son and daughter from Russia in 2006. The tax credits and employer assistance ($5000 per child) paid a good portion. Russia travel was very expensive and living in California meant outrageous notary / certification/ apostle fees. Well worth it.
yobria
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Re: The Economics of Adoption

Post by yobria »

Interesting, thanks. Any reason you didn't adopt from mainland China? I'd think of going there before Taiwan, since Taiwan is so wealthy now. I was on Shaiman Island in Guangzhou a couple of years ago, where all the Americans come to adopt kids. Lots of new moms on the train to HK!
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therub
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Re: The Economics of Adoption

Post by therub »

yobria wrote:Interesting, thanks. Any reason you didn't adopt from mainland China? I'd think of going there before Taiwan, since Taiwan is so wealthy now. I was on Shaiman Island in Guangzhou a couple of years ago, where all the Americans come to adopt kids. Lots of new moms on the train to HK!
Yes - for China you have to be age 30 to start the process (we weren't at the time), and the typical wait time was over 4 years.

I have read that Taiwan is trying to encourage domestic adoption, but for whatever reason they are not able to place all of their children domestically. One benefit of a wealthy country is the kids are very well cared for. Korea is another example of this phenomena.
Fees are the rub.
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HueyLD
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Re: The Economics of Adoption

Post by HueyLD »

therub wrote:I have read that Taiwan is trying to encourage domestic adoption, but for whatever reason they are not able to place all of their children domestically.
I am puzzled by your statement. AFAIK, birth rate is extremely low in Taiwan and there is a shortage of kids to fill their schools. Why do they have spare children for adoption, especially boys?
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norookie
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Re: The Economics of Adoption

Post by norookie »

:oops: You should have just flew over, found a stray walking the streets about 3-4yrs old, and taken a slow boat home :oops: Did you get a laugh, or were you insulted, astonished, horrified, BECAUSE I WAS JUST KIDDING! No really I had no Idea of the costs, Geeessshh.
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xystici
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Re: The Economics of Adoption

Post by xystici »

Thanks for sharing. Congratulations on your new adopted children.
1. Why not domestic adoption?
2. What are the costs associated with this option?
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The Dark Knight
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Re: The Economics of Adoption

Post by The Dark Knight »

HueyLD wrote:
therub wrote:I have read that Taiwan is trying to encourage domestic adoption, but for whatever reason they are not able to place all of their children domestically.
I am puzzled by your statement. AFAIK, birth rate is extremely low in Taiwan and there is a shortage of kids to fill their schools. Why do they have spare children for adoption, especially boys?
Because we are talking about Asian countries, I know South Korea and Japan have similar demographic issues. Still, I would imagine there are "spare" children as a result of unwanted pregnancies, orphaned children with no other known relatives, and parents not wanting to raise a child with certain physical or mental handicaps.

I believe in a country like South Korea, things like being a single and/or teenage mother are highly frowned upon by society. At the same time, I believe abortions are hard to come by. So such children end up being given up for adoption.

I do remember reading that Japan (which probably has the worst demographic problem in the entire world) basically forbids international adoption, and would rather children grow up in state-run orphanages if that's the only other alternative.

Anyways, this is an intriguing topic.
Jim127
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Re: The Economics of Adoption

Post by Jim127 »

We have adopted 2 children from China. As mentioned above, the wait time is now 4+ years for the normal route. However, for those interested, I would check into the waiting child program (older children, special needs/medical issues). For us, we lived in an area that had excellent pediatric cardiovascular care. As such, we were willing to adopt and care for a child that could require corrective heart surgery. The wait time for waiting child can be less than a year. Often, a child is identified while you are still in process with the paperwork.

As to the domestic adoption question, there are children all over the globe that need homes. Every country has issues and you decide what you and your spouse are comfortable with. It is such a long subject, it is not easy to cover all the issues in a simple post.
Last edited by Jim127 on Tue Apr 03, 2012 6:10 pm, edited 1 time in total.
kiligi
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Re: The Economics of Adoption

Post by kiligi »

Some other interesting economics of adoption:

The adoption tax credit phases out as household income increases - completely phasing out at $169K. So, not all adoptive families are able to take advantage of said tax credit, though I am sure that sympathy is muted for those families not qualifying.

For the person asking about mainland China adoptions, current wait times are approximately 6 years (and increasing each month). At current time, people who submitted their dossiers in August of 2006 are still waiting to be matched. International adoption can be quite risky, due to increasing wait times and the risk that countries will close down their adoption programs while there are families mid process.

Domestic adoptions also qualify for the adoption credit, and in fact you can qualify for the credit even if your adoption falls through (domestic only) if you spent money during the process that was lost due to a placement falling through (parents choosing to parent instead of placing for adoption).

There are lots of children available to be adopted domestically. Sadly, many will not be considered by families pursuing adoption due to the child's age, exposure to drugs/alcohol in utero or because they are part of a sibling group that is not being split up. The economics of adoption can be quite depressing when you look at it from the children waiting for families perspective.
Jim127
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Re: The Economics of Adoption

Post by Jim127 »

As a side comment, when you think about the first year costs of a biological child (medical costs, diapers, formula, clothes, etc.), the cost of adoption (depending on age of the adopted child) may not be much different.
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Teetlebaum
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Re: The Economics of Adoption

Post by Teetlebaum »

Yes, I'm astonished at the low net cost. And congratulations.
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Re: The Economics of Adoption

Post by xerty24 »

kiligi wrote:For the person asking about mainland China adoptions, current wait times are approximately 6 years (and increasing each month).
this is not a statement about adoption per se, but if some Chinese bureaucrat tells you there's a N year wait, I bet enough dollars spread around appropriately can make that happen in a few months. It's a freer market than the US like that, but you might need a local "consultant" to pull it off as an outsider.
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kiligi
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Re: The Economics of Adoption

Post by kiligi »

xerty24 wrote:
kiligi wrote:For the person asking about mainland China adoptions, current wait times are approximately 6 years (and increasing each month).
this is not a statement about adoption per se, but if some Chinese bureaucrat tells you there's a N year wait, I bet enough dollars spread around appropriately can make that happen in a few months. It's a freer market than the US like that, but you might need a local "consultant" to pull it off as an outsider.
Unless you are Chinese (living in mainland China), or willing to adopt a "waiting child" - i.e. a child with an identified disability - then the wait time for China adoption is 6 years and growing.

What you are talking about is child trafficking - illegal everywhere. And I am a bit disturbed that anyone would even want to suggest that that could happen. Especially since - even if that type of obscenely illegal trafficking took place - you would still have to go through the US Embassy for the visas necessary to bring your child home. And the US Embassy isn't going to grant a visas without all the proper documentation from both the US government in the US (a process taking approximately 6-12 months on its own before even sending in your adoption dossier to China) and the US Embassy in China which requires a whole raft of documentation from the central Chinese adoption office in Beijing - as well as the provincial adoption agencies and court system.

Trust those of us who have actually gone through the process - there really isn't wiggle room. China adoption is considered to be one of the most ethical and transparent systems in international adoption. It is regulated by a Central Agency, and each child is placed by that central agency and children are only available from orphanages approved to participate in international adoption. Each receiving country also has its own system that parents and child must travel through to gain approval which also adds time to wait the wait on both sides. 4-12 months to put an application together. 6 years to wait in line unless you are matched with a "waiting child". 3-12 months to get approval to travel to China and finalize the adoption. Your assumptions here are grossly misplaced.

Edited to Add: China is also one of the few countries that has a set, transparent and stable cost for adoption. Each family pays a set $5000 adoption fee (plus about $1500 in court costs) to the orphanage as the adoption fee. It does not matter whether you are matched with a girl, boy, baby, toddler or adolescent - non special needs or special needs - the cost to complete the adoption in China remains the same. This fee has only been raised once in the entire history of international adoption from China - for the first 15 years or so - it was $3000. It changed several years back to $5000 as the dollar lost value to the yuan and costs went up in China.
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renditt
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Re: The Economics of Adoption

Post by renditt »

We adopted our daughter domestically a couple of years ago. It was an open adoption and we met the birth mother before our daughter was born and were actually in the hospital when our daughter was born, so we are looking after her since day 1. Worked with a wonderful agency.

Couldn't even tell you anymore what the economics were, all I know is that the adoption cost were nothing compared with raising a child :D
kiligi
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Re: The Economics of Adoption

Post by kiligi »

renditt wrote:We adopted our daughter domestically a couple of years ago. It was an open adoption and we met the birth mother before our daughter was born and were actually in the hospital when our daughter was born, so we are looking after her since day 1. Worked with a wonderful agency.

Couldn't even tell you anymore what the economics were, all I know is that the adoption cost were nothing compared with raising a child :D
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archbish99
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Re: The Economics of Adoption

Post by archbish99 »

renditt wrote:We adopted our daughter domestically a couple of years ago. It was an open adoption and we met the birth mother before our daughter was born and were actually in the hospital when our daughter was born, so we are looking after her since day 1. Worked with a wonderful agency.

Couldn't even tell you anymore what the economics were, all I know is that the adoption cost were nothing compared with raising a child :D
We're actually early in the process, so I know all too well what the costs are -- we're about to pay our first BIG lump sum. It'll vary regionally, and by agency, but here's what we're looking at:
  • Agency fees:
    • $550 at application
    • $200 for Training
    • $2,000 for the Home Study
    • $10,000 due at approval
    • $14,400 at placement
  • Legal fees: $500-$1,000 to finalize adoption
  • Other miscellaneous:
    • $65 - FBI background check
    • $225 - Profile books on Shutterfly
While the agency fee is substantial, the agency we're working through provides services to expectant parents at no charge, regardless of whether they choose to place their child for adoption. We think of it as our money subsidizing the services provided to our eventual child's birthparents, plus other parents who may ultimately choose to parent their children. We've made donations to them before, and look at this as a semi-required donation.

We're also theoretically on the hook for a share of the birthmother's medical expenses if she doesn't have insurance and they're not covered by the state, but it's extremely rare for the state not to cover pre-natal and maternity care here.

Actually, our home study fee should already be due, but they haven't asked for it yet. The process is still moving, so if they don't ask for money, I'm not volunteering it right away. :wink: We're closing in on approval, and I imagine they'll notice the $10k really quickly at that point.

Of course, after the adoption is finalized, we get similar benefits as the OP -- my employer has a $5k adoption benefit, plus the tax credit of ~$13k if it lasts, so a net cost of more like $12k. The OP "cheated" by getting two kids -- that doubles the benefits with far less than double the cost. (In our case, we've said we're open to twins, which would increase the cost by less than $2k, but double the employer and federal benefits, making it virtually free. However, twins are rare in domestic infant.)
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Re: The Economics of Adoption

Post by VictoriaF »

I am puzzled by the adoptions from China. The country has a one child per family policy, and so I would expect that there is a shortage of children, not a surplus.

Victoria
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glennaudi
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Re: The Economics of Adoption

Post by glennaudi »

We adopted our girl (Grace) from mainland China (shanghai) 11 years ago, our costs were similar to what has been stated. It took us 2.5 years for the entire process.
For our family it's been a blessing of exponential proportions, she is warm, outgoing and has the kindest heart. Teachers in her school come up to me unsolicited and say everyone is fighting for Grace for their class, she is nothing but a ray of sunshine !

I can't say enough about the good karma that has come to our family, I have a natural daughter as well and Grace has had positive influences on her as well.

Wish you the best on your new family.

Glenn
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SSSS
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Re: The Economics of Adoption

Post by SSSS »

VictoriaF wrote:I am puzzled by the adoptions from China. The country has a one child per family policy, and so I would expect that there is a shortage of children, not a surplus.

http://en.wikipedia.org/wiki/One-child_policy
The social pressure exerted by the one-child policy has affected the rate at which parents abandon undesirable children, and many live in state-sponsored orphanages, from which thousands are adopted internationally and by Chinese parents each year. In the 1980s and early 1990s, poor care and high mortality rates in some state institutions generated intense international pressure for reform.[89]

According to Sten Johansson and Ola Nygren (1991) adoptions accounted for half of the so-called "missing girls" in the 1980s in the PRC.[90] Through the 1980s, as the one-child policy came into force, parents who desired a son but bore a daughter in some cases failed to report or delayed the reporting of the birth of the girl to the authorities. But rather than neglecting or abandoning unwanted girls, the parents may have offered them up for formal or informal adoption. A majority of children who went through formal adoption in China in the later 1980s were girls, and the proportion who were girls increased over time (Johansson and Nygren 1991).

The practice of adopting out unwanted girls is consistent with both the son preference of many Chinese couples and the findings of Zeng et al. (1993) and Anderson and Silver (1995) that under some circumstances families have a preference for girls, in particular when they have already satisfied their goals for sons. Research by Weiguo Zhang (2006) on child adoption in rural China reveals increasing receptivity to adopting girls, including by infertile and childless couples.[91]

In 1992, China instituted its first Adoption Law. Officially registered adoptions increased from about 2,000 in 1992 to 55,000 in 2001. According to one scholar, these figures "represent a small proportion of adoptions in China because many adopted children were adopted informally without official registrations. International adoption rates climbed dramatically after the early 1990s, increasing to the U.S. alone from about 200 in 1992 to more than 7,900 in 2005.[92]

According to the Los Angeles Times, many babies put up for adoption had not been abandoned by their parents, but confiscated by family planning officials.[93]
kiligi
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Re: The Economics of Adoption

Post by kiligi »

VictoriaF wrote:I am puzzled by the adoptions from China. The country has a one child per family policy, and so I would expect that there is a shortage of children, not a surplus.

Victoria
Victoria

There are about 175,000 orphans in state care in China. Most of the children have identified special needs severe enough to not make them eligible for adoption (either domestic or international). The international adoption from China reached its peak in 2005, when about 11,000 total Chinese children were placed worldwide with adoptive parents. Since then, the number of children placed every year has dropped precipitously. I believe about 2,000 children were placed last year in the US...and over 50% of those children had identified special needs (like cleft lip, heart defect, limb difference, etc). As China has realized that there are parents eager to adopt children, even those with severe special needs - it has expanded its Waiting Child program

International adoption from China used to primarily place infant/toddler girls without identified special needs (though as with all children, there was never a guarantee). However, since the program officially began in 1992, there have been some sweeping changes. Increase standard of living, the rise in domestic adoption and the drop in fertility rates in China have all led to fewer children being available for international adoption. It is also more likely now that families will be matched with either a boy or a girl - although girls are still more likely overall.

There really isn't a huge surplus of children available for adoption in China, especially when you consider the size of the population. However, when the program began - domestic adoption was not nearly as desirable (it is amazing to see the changes in attitude in just a generation in that respect) and so they opened IA up. Approximately 100,000 children have been placed over the lifetime of the program (~20 years). As times have changed, and there are even fewer available children, wait times have increased dramatically and the focus of IA has switched from placing non special children children to placing children with moderate to severe special needs. Domestic adoption (approximately 30,000 a year) has meant there are even fewer children available for IA.

To put these numbers in perspective, in the US we have about 165,000 children available to be adopted (their family's parental rights have been terminated and they are waiting for placement). And the US places approximately 600 children in families through the US international adoption system yearly (many of the children are placed in Canada and Europe).

I hope this gives you more information about the program and adoption in general. :)
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Re: The Economics of Adoption

Post by tonsofthorns »

My wife and I adopted from china in 2005, the whole process took about a year. Costs are very similar to others on this thread. We have been waiting five years for our next child from China.
In the meantime, we decided to be foster parents to give our child a opportunity to help care for a younger child. We wanted to give back for what my daughters foster mother did for her. We ended up adopting our second foster child. He was with us a year and we had to commit to adopt or they would place into a family that wanted to adopt. We chose to adopt. I do not know how some families could let a child go after being in their family for more than a year. Then, our county decided they would subsidized him with a monthly check after adoption and we qualified for a full adoption tax credit.
Two journeys, one were we paid a sum and one where we were more than reimbursed for our expenses.
We would not change our journey. The scrutiny we received was more than worth the two awesome children that have blessed our life . The opportunity for adoption exists for all budgets.
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Re: The Economics of Adoption

Post by celia »

therub wrote: The funny thing about the adoption "business" is that it is a market just like any other: countries with more demand cost more, while less popular countries cost less.
I'm curious, can you give us an idea of which countries are "most economical" (lowest cost to adoptive parents), which are about average, and which are more expensive?
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Re: The Economics of Adoption

Post by 3CT_Paddler »

VictoriaF wrote:I am puzzled by the adoptions from China. The country has a one child per family policy, and so I would expect that there is a shortage of children, not a surplus.

Victoria
Like others said, that policy only worsened the situation of abondoned babies. Often girls or any baby with defects were abandoned, because if parents were only going to have one baby, they want it to be a healthy boy. I have a friend who worked in a Chinese orphanage about 7 years ago, and they were overwhelmed with all of the abandoned babies. Infantacide and gender based abortion is also more common there.
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Re: The Economics of Adoption

Post by noyopacific »

xystici wrote:Thanks for sharing. Congratulations on your new adopted children.
1. Why not domestic adoption?
2. What are the costs associated with this option?
My wife and I did a domestic adoption 19 years ago. I believe that one of the reasons that so many people go with foreign adoptions is that the demand for US born infants, particularly those without any special needs, is much greater than the supply.

We had to travel out-of-state to get our daughter but were able to use frequent flyer tickets and we stayed with friends so the travel costs were minimal. The cost of adopting our daughter probably totaled less than $2,500 for attorney's fees & court costs. I guess it is in our basic nature to be Bogleheadly-frugal.

If we had needed to hire adoption consultants to help market us to prospective birth parents, and paid to support a birth mother during her pregnancy, the lowest cost could have might have hoped for would have been at least $15,000. I've heard of it going over $50,000. Another factor is that if the birth mother changes her mind after you have paid to support her for 6 months, there is little hope of recovering your money.

We have been very happy with the results of our investment in adoption.
No one is going to convince me that their long-term returns were better than ours ! :happy
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Re: The Economics of Adoption

Post by rnitz »

Another (old) data point. We adopted babies 17 and 19 years ago - these were open adoptions in the US so we met the birth mother and took them home from the hospital at birth. The total cost was around $ 5K each (mostly to the adoption agency but some to help the birth mother defray costs).

I haven't followed the "adoption market" in the intervening years, but I'm somewhat shocked at the costs for foreign adoptions. I think it's wonderful that parents are willing and available, I just didn't realize what's happened to the supply/demand. Godspeed to those that are trying to adopt. I concur with the previous posters, the costs may be high but the value is priceless.
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therub
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Re: The Economics of Adoption

Post by therub »

celia wrote:
therub wrote: The funny thing about the adoption "business" is that it is a market just like any other: countries with more demand cost more, while less popular countries cost less.
I'm curious, can you give us an idea of which countries are "most economical" (lowest cost to adoptive parents), which are about average, and which are more expensive?
Russia is always listed as an example of the most expensive. I believe they require two separate trips, and Moscow is one of the most expensive cities in the world. I often hear "50k".

Here are some number's I've found by googling around:
China - 20-25k
Guatemala - 25-30k
Russia - 35k+
Ethopia - 12-21k
South Korea - 20-25k
Vietnam - 20-30k
Ukraine - 30k+
Kazakhstan - 30k+
India - 20k+
Philippines - 17-25k
source: http://www.adoptivefamilies.com/countries.php

I hate to generalize too much but my impression is that Russia and eastern European countries are most expensive, Asia and South/Central America in the middle, and Africa is on the low end. Again, there are exceptions but this is the trend I noticed when doing our research.

The US State department has a really well done site on adoption by country: http://adoption.state.gov/. See also their short 2011 report that gives a pretty good overview of intercountry adoption rates http://adoption.state.gov/content/pdf/f ... report.pdf.
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archbish99
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Re: The Economics of Adoption

Post by archbish99 »

I believe the biggest variances on international adoption costs hinge on required number/duration of stay(s) and cost of living in the country. Countries that require two trips will obviously require four (expensive) round-trip plane tickets and two (super-expensive) one-way plane tickets. Other countries only require one trip, but may require a four to eight week stay in-country. Factor in cost of living for that country, plus the value of your lost wages and/or vacation time if you're not super-lucky and able to work remotely from who-knows-where. The cheapest countries require only one trip, have a short stay required, and may only require one parent to come.

Even inter-state domestic adoption requires a stay, though not as long. We've said that we're open to inter-state placement, but only in states where we have friends and family to stay with for however long the process takes.
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bhtomj
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Re: The Economics of Adoption

Post by bhtomj »

The number of Russia trips is set by the court in the region you adopt from. For our 2006 adoptions we made two trips, but that region is now 3 or 4 trips. At that time other regions in Russia were 3 trips: acceptance, court, passport waiting period. Kazakhstan was only 1 trip - 21 days straight - not sure how it is now.

Russia was also very expensive but we had our kids home within eight months from our initial application. Although giving $13000 cash to someone you just met requires some faith! :moneybag
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Ted Valentine
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Re: The Economics of Adoption

Post by Ted Valentine »

Congratulations on the adoption of your children! Your post was very interesting and informative.

We adopted domestically in 2003 and the costs were around $20k then. Getting the tax credit after the adoption was finalized was a huge bonus. We were very fortunate (or blessed) in that we did not wait very long. Our son basically fell into our lap.

What you said about the "business" aspect is true, and I found it a little disturbing when we went through the process. For example, I recall the agency fee for a white child was ~$10,000 for a male and ~$15,000 for female. The fee was half that for a baby of color. There were no fees for children in homes and foster children or special needs.

Although I understand the reasons, it doesn't sit well with me. It was uncomfortable going through the application with the social working having to answer questions like: What color do you want your child? What age? What birth defects can you accept?
Although our intellect always longs for clarity and certainty, our nature often finds uncertainty fascinating.
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