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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-i-Font
  • Sergi Jimenez-Martin
  • Cristina Vilaplana

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.

Suggested Citation

  • Joan Costa-i-Font & Sergi Jimenez-Martin & Cristina Vilaplana, 2016. "Thinking of Incentivizing Care? The Effect of Demand Subsidies on Informal Caregiving and Intergenerational Transfers," CESifo Working Paper Series 6124, CESifo.
    • Handle: RePEc:ces:ceswps:_6124
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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. 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.
    3. 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.
    4. 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.
    5. Joan Costa-Font & Sergi Jimenez-Martin & Cristina Vilaplana-Prieto & Analía Viola, 2023. "Universalizing the Access to Long-term Care: Evidence from Spain," NBER Working Papers 31825, National Bureau of Economic Research, Inc.
    6. 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.
    7. 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," IZA Discussion Papers 10988, Institute of Labor Economics (IZA).
    8. 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.
    9. 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.
    10. 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.
    11. Joan Costa-Font, 2023. "How to support adult caregivers?," IZA World of Labor, Institute of Labor Economics (IZA), pages 510-510, June.
    12. Joan Costa-Font & Sergi Jiménez & Cristina Vilaplana Prieto & Analía Viola, 2022. "Long-term Care in Spain," Studies on the Spanish Economy eee2022-23, FEDEA.
    13. 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).
    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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    Keywords

    caregiving; intergenerational transfers; difference-in-differences; long-term care; family transfers; exchange motivation; caregiving allowances; demand side cash subsidies;
    All these keywords.

    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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