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Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers

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  • Joan Costa-Font
  • Sergi Jiménez-Martín
  • Cristina Vilaplana-Prieto

Abstract

We still know little about what motivates the informal care arrangements provided in old age. Evidence from demand-side subsidies such as unconditional caregiving allowances (cash benefits designed either to incentivize the purchase of care, or compensate for the loss of employment of informal caregivers) provide an opportunity to gain a further understanding of the matter. We exploit a quasi-natural experiment to identify the effects of the inception in 2007 (and reduction in 2012) of a universal caregiving allowance on the supply of informal care, and subsequent intergenerational transfer flows. We find evidence of a 30% rise in informal caregiving, which amounts to 27% of long-term care expenditure, and an increase (reduction) in downstream (upstream) intergenerational transfers of 29% (and 15%). The effects were attenuated by a subsequent policy intervention; the reduction of the subsidy amidst austerity cuts in 2012. Individuals in middle and lower income and wealthy quintiles mainly drive these effects.

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  • Joan Costa-Font & Sergi Jiménez-Martín & Cristina Vilaplana-Prieto, 2016. "Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers," Working Papers 2016-08, FEDEA.
  • Handle: RePEc:fda:fdaddt:2016-08
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    1. El experimento dependencia
      by Sergi Jiménez in Nada Es Gratis on 2016-10-14 06:00:42

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    2. Hollingsworth, Bruce & Ohinata, Asako & Picchio, Matteo & Walker, Ian, 2017. "Labour supply and informal care supply: The impacts of financial support for long-term elderly care," GLO Discussion Paper Series 118, Global Labor Organization (GLO).
    3. Renner, Anna-Theresa & Shaikh, Mujaheed & Spitzer, Sonja, 2023. "The long-term impact of maternal leave duration on smoking behavior," MPRA Paper 118675, University Library of Munich, Germany.
    4. Rapp, Thomas & Jena, Anupam B. & Costa-Font, Joan & Grabowski, David C., 2023. "Caregiving across generations: Do older adults with more grandchildren get another bite at the “sandwich” generation?," Social Science & Medicine, Elsevier, vol. 334(C).
    5. Joan Costa-Font & Sergi Jiménez & Cristina Vilaplana Prieto & Analía Viola, 2022. "Long-term Care in Spain," Studies on the Spanish Economy eee2022-23, FEDEA.
    6. Costa-Font, Joan & Vilaplana-Prieto, Cristina, 2022. "Mental health effects of caregivers respite: Subsidies or Supports?," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    7. Joan Costa-Font & Valentina Zigante, 2020. "Building ‘implicit partnerships’? Financial long-term care entitlements in Europe," Policy Sciences, Springer;Society of Policy Sciences, vol. 53(4), pages 697-712, December.
    8. Joan Costa-Font, 2023. "How to support adult caregivers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 510-510, June.
    9. Eric Bonsang & Joan Costa-Font & Joan Costa-i-Font, 2023. "The “Demise of the Caregiving Daughter”? Gender Employment Gaps and the Use of Formal and Informal Care in Europe," CESifo Working Paper Series 10792, CESifo.
    10. Miao Guo & Yang Li & Minghao Wu & Terence C. Cheng, 2024. "Services and Cash: How Long-term Care Insurance Benefit Design Affects Household Behavior in China," Papers 2024-13, Centre for Health Economics, Monash University.
    11. Florentino Felgueroso & Angel de la Fuente & José E. Boscá & Joan Costa i Font & Rafael Doménech & Javier Ferri & José I. García Pérez & Sergi Jiménez & Diego Rodríguez & Analía Viola, 2020. "Aspectos económicos de la crisis del Covid-19. Boletín de seguimiento nº2," Studies on the Spanish Economy eee2020-14, FEDEA.
    12. Pilar (P.) Garcia-Gomez & Helena M Hernandez-Pizarro & Guillem Lopez-Casasnovas & Joaquim Vidiella-Martin, 2019. "Unravelling Hidden Inequities in a Universal Public Long-Term Care System," Tinbergen Institute Discussion Papers 19-011/V, Tinbergen Institute.
    13. Costa-Font, Joan & Zigante, Valentina, 2020. "Building ‘implicit partnerships’? Financial long-term care entitlements in Europe," LSE Research Online Documents on Economics 106099, London School of Economics and Political Science, LSE Library.
    14. Sergi Jiménez-Martín & Analía Viola, 2020. "La asistencia residencial en España y COVID-19," Studies on the Spanish Economy eee2020-20, FEDEA.

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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