In a study on living conditions among children, 13-18 years old (n = 272) in on-going foster and residential care, concepts from welfare theory and empirical research are applied. We argue that using a welfare perspective and the concept of level of living when assessing looked after children's situation provides several advantages. From this perspective, children are agents for whom access to resources will influence their discretion and possibility to act. By using concepts from welfare research and replicated national surveys of living conditions on a population of placed children, we can assess the extent to which these children enjoy such a standard while in care. In other words, it is possible to assess the compensatory capacity of state care for a population of children that has been recognized as deprived in terms of welfare resources in their birth families. The overall conclusion concerning the welfare dimensions studied is that children in care in general have less access to resources than their peers in the normal population. This holds particularly true for children in residential care, where the differences are substantial. In other words, the care context tends to differentiate the extent to which society acts to compensate for the initial disadvantaged position from which children in care often originate