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

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Listed:
  • Costa-Font, Joan

    () (London School of Economics)

  • Jimenez-Martin, Sergi

    () (Universitat Pompeu Fabra)

  • Vilaplana-Prieto, Cristina

    (Universidad de Murcia)

Abstract

We study the effect of demand-side subsidies to old age care recipients on both caregiving and intergenerational transfer decisions. We exploit two quasi-natural experiments referring to the inception of a universal and unconditional caregiving allowance in 2007 and its subsequent reduction in 2012. We find that the introduction of a caregiving allowance of a magnitude up to 530€ in 2011 increased the probability of informal caregiving by 32% and the intensity of care in 13.5 days/year. Consistently, we find that downstream (upstream) intergenerational transfers increased (decreased) in a magnitude of 29% (15%). The effects concentrate among middle and lower income households and were attenuated by the reduction of the subsidy.

Suggested Citation

  • Costa-Font, Joan & Jimenez-Martin, Sergi & Vilaplana-Prieto, Cristina, 2018. "Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers," IZA Discussion Papers 11774, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp11774
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    References listed on IDEAS

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    Cited by:

    1. 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).

    More about this item

    Keywords

    caregiving; intergenerational transfers; unconditional transfer; difference-in-differences; long-term care; family transfers; exchange motivation; caregiving allowances; demand-side cash subsidies;

    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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