Formal care of the elderly and health outcomes among adult daughters

Health‐care expenditures and the demand for caregiving are increasing concerns for policy makers. Although informal care to a certain extent may substitute for costly formal care, providing informal care may come at a cost to caregivers in terms of their own health. However, evidence of causal effects of care responsibilities on health is limited, especially for long‐term outcomes. In this paper, we estimate short and long‐term effects of a formal care expansion for the elderly on the health of their middle‐aged daughters. We exploit a reform in the federal funding of formal care for Norwegian municipalities that caused a greater expansion of home care provision in municipalities that initially had lower coverage rates. We find that expanding formal care reduced sickness absence in the short run, primarily due to reduced absences related to musculoskeletal and psychological disorders. The reduction in sickness absence is concentrated among workers with little work flexibility (e.g., shift workers), whereas there are no effects for workers with more flexible jobs. We were unable to detect effects on long‐term health and healthcare utilization outcomes. Our results imply that sickness absence uptake could be hiding a need for more flexibility around work for people with caregiving responsibilities.