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

52 Pages Posted: 18 Nov 2016

See all articles by Joan Costa-Font

Joan Costa-Font

London School of Economics & Political Science (LSE)

Sergi Jimenez-Martin

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences

Cristina Vilaplana

University of Murcia

Multiple version iconThere are 2 versions of this paper

Date Written: May 2017

Abstract

We show that demand side cash subsidies to care recipients alter both caregiving and intergenerational transfer decisions. We exploit a quasi-natural experiment referring to the inception of a universal caregiving allowance (in 2007 and its reduction in 2012). We find a caregiving subsidy (of a magnitude of 530€ in 2011) to increase the probability of informal caregiving by 32% (the intensity of care in 13.5 days/year). Similarly, 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.

Keywords: caregiving, intergenerational transfers, difference-in-differences, long-term care, family transfers, exchange motivation, caregiving allowances, demand side cash subsidies

JEL Classification: I180, D140, G220

Suggested Citation

Costa-Font, Joan and Jimenez-Martin, Sergi and Vilaplana, Cristina, Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers (May 2017). CESifo Working Paper Series No. 6124. Available at SSRN: https://ssrn.com/abstract=2871163

Joan Costa-Font (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://https://joancostaifont.org/

Sergi Jimenez-Martin

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain
(34) 93 542 16 67 (Phone)
(34) 93 542 17 46 (Fax)

Cristina Vilaplana

University of Murcia ( email )

Avda Teniente Flomesta, 5
Murcia, Murcia 30100
Spain

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