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Informal and Formal Care in Europe

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  • Viitanen, Tarja

    (University of Otago)

Abstract

Government expenditure on formal residential care and home-help services for the elderly significantly reduces 45-59 year old women’s informal care-giving affecting both the extensive and the intensive margin. Allowing for country fixed-effects and country-specific trends and correcting for attrition, the estimates – based on the European Community Household Panel – imply that a 1000 Euro increase in the government expenditure on formal residential care and home-help services for the elderly decreases the probability of informal care-giving outside of the caregiver’s household by 6 percentage points. Formal care substitutes for informal care that is undertaken outside of the carer’s own household, but does not substitute for intergenerational household formation. A simulation exercise shows that an increase in government formal care expenditure is a cost-effective way of increasing the labour force participation rates.

Suggested Citation

  • Viitanen, Tarja, 2007. "Informal and Formal Care in Europe," IZA Discussion Papers 2648, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2648
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    More about this item

    Keywords

    informal care; formal care; ECHP; attrition bias;
    All these keywords.

    JEL classification:

    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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