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

51 Pages Posted: 17 Sep 2018

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-Prieto

University of Murcia

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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.

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

Suggested Citation

Costa-Font, Joan and Jimenez-Martin, Sergi and Vilaplana-Prieto, Cristina, Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers. IZA Discussion Paper No. 11774. Available at SSRN: https://ssrn.com/abstract=3249888

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-Prieto

University of Murcia

Avda Teniente Flomesta, 5
Murcia, Murcia 30100
Spain

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