Informal care and health care use of older adults

Informal care by adult children is a common form of long-term care for older adults and can reduce medical expenditures if it substitutes for formal care. We address how informal care by all children affects formal care, which is critically important given demographic trends and the many policies proposed to promote informal care. We examine the 1998 Health and Retirement Survey (HRS) and 1995 Asset and Health Dynamics Among the Oldest-Old Panel Survey (AHEAD) using two-part utilization models. Instrumental variables (IV) estimation controls for the simultaneity of informal and formal care. Informal care reduces home health care use and delays nursing home entry.