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Is Caring Productive? The Effect of Adult Social Care on Paid Production in England

Author

Listed:
  • Francesco Longo
  • Karl Claxton
  • Anne Mason
  • Andrea Salas‐Ortiz
  • Adrian Villasenor‐Lopez

Abstract

Long‐term care (LTC) provides essential support to service users and informal carers to improve their quality of life. By improving quality of life, LTC can potentially impact economic growth, for example, it may enable service users of working age and their carers to spend more time in paid employment. This study investigates the effect of publicly‐funded LTC expenditure on a measure of paid production across local authorities in England. We analyze yearly data from 2014/15 to 2019/20 using a dynamic panel model estimated by the Arellano‐Bond estimator. We find that a £1000 increase in LTC expenditure per client increases paid production per capita by £216 in the short run and by £670 in the long run. These findings may inform policy makers interested in assessing the financial sustainability of LTC policies.

Suggested Citation

  • Francesco Longo & Karl Claxton & Anne Mason & Andrea Salas‐Ortiz & Adrian Villasenor‐Lopez, 2025. "Is Caring Productive? The Effect of Adult Social Care on Paid Production in England," Health Economics, John Wiley & Sons, Ltd., vol. 34(12), pages 2182-2195, December.
    • Handle: RePEc:wly:hlthec:v:34:y:2025:i:12:p:2182-2195
    DOI: 10.1002/hec.70026
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    References listed on IDEAS

    as
    1. Nancy Devlin & Paul Hansen, 2001. "Health care spending and economic output: Granger causality," Applied Economics Letters, Taylor & Francis Journals, vol. 8(8), pages 561-564.
    2. Francesco Longo & Karl Claxton & Andrea Salas‐Ortiz & James Lomas & Stephen Martin, 2025. "Does Publicly‐Funded Adult Social Care Impact Informal and Unpaid Carers' Quality of Life in England?," Health Economics, John Wiley & Sons, Ltd., vol. 34(7), pages 1217-1238, July.
    3. Stephen R. Bond, 2002. "Dynamic panel data models: a guide to micro data methods and practice," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 1(2), pages 141-162, August.
    4. Karl Claxton & Mark Sculpher & Stephen Palmer & Anthony J Culyer, 2015. "Causes For Concern: Is Nice Failing To Uphold Its Responsibilities To All Nhs Patients?," Health Economics, John Wiley & Sons, Ltd., vol. 24(1), pages 1-7, January.
    5. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers 09/02, Institute for Fiscal Studies.
    6. Christoph Schaltegger & Benno Torgler, 2006. "Growth effects of public expenditure on the state and local level: evidence from a sample of rich governments," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1181-1192.
    7. Bloom, David E. & Canning, David & Sevilla, Jaypee, 2004. "The Effect of Health on Economic Growth: A Production Function Approach," World Development, Elsevier, vol. 32(1), pages 1-13, January.
    8. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    9. Francesco Longo & Karl Claxton & Stephen Martin & James Lomas, 2023. "More long‐term care for better healthcare and vice versa: investigating the mortality effects of interactions between these public sectors," Fiscal Studies, John Wiley & Sons, vol. 44(2), pages 189-216, June.
    10. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
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