Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers
51 Pages Posted: 17 Sep 2018
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.
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, D14, G22
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