Non-FAU Project
Start date : 01.09.2018
We study the impact of subsidizing home-based long-term care on recipients' health and on the labor supply of their working-age children. We use administrative data from Israel on the universe of welfare benefit applications with tax records of applicants and their adult children. To address the endogeneity of benefit recipients' health status we instrument for benefit receipt using the leniency of randomly assigned nurses who evaluate applicant's functional status and determine benefit eligibility. We find that approving and subsidizing in-home care has weak positive effects on labor market participation and income of recipient children (especially daughters), but large adverse effects on recipient health.
Taken together, results are consistent with crowd-out of self-care more than with substitution between informal and formal care.