Chiara Malavasi (ZEW Mannheim)
Katja Kaufmann
We analyze the spillover effects of long-term care arrangements within families across three generations. Using administrative data on the Dutch population, we evaluate the impact of a 2015 reform to public long-term care in the Netherlands. It promoted aging in place and introduced stricter criteria for nursing home access. We compare the labor supply adjustments of families with elders who lost access with those who remained eligible post-reform, in a Difference-in-Differences design. Losing access to nursing homes decreased children wealth, and increased their labor supply. We examine heterogeneous responses by gender, family composition, individual opportunity costs, socioeconomic status, and location. Daughters increase (decrease) labor supply, if their hourly wage is higher (lower) than the opportunity cost of informal caregiving. Sons increase their work hours or decrease their savings, depending on their parents financial means. Grandsons decrease their labor supply, in smaller or richer families. Granddaughters also decrease their labor supply, if they no longer live with their parents.