Does informal care delay nursing home entry? Evidence from Dutch linked survey and administrative data

We assess whether informal care receipt affects the probability of transitioning to a nursing home. Available evidence points towards informal care decreasing the chance of admission but it only derives from the US, where nursing home stays are often temporary. Exploiting linked survey and administrative data on the 65+ in the Netherlands, we use the gender mix of children to retrieve plausibly exogenous variation in informal care receipt. Our results suggest that nursing home admissions within a three-year period are reduced with informal care for individuals with mild limitations, while they are increased for individuals with severe limitations. For the latter, although informal care increases formal care costs, it also results in lower post-acute care use and mortality. Therefore, policy makers should not expect that promoting informal care systematically results in lower institutionalization rate and care costs. Still, informal support can well be welfare-enhancing: a timely admission may come along with benefits in terms of well-being and survival that may outweigh additional costs.