We study the impact of subsidizing home-based long-term care on recipients’ health and the labor supply of their working-age children. We use administrative data from Israel on the universe of welfare benefit applications linked 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 evaluators who assess the applicant’s functional status and determine benefit eligibility. We find that for compliers – applicants who receive subsidies only from more lenient evaluators – subsidizing home-based care has large adverse effects on recipient health but no detectable effects on the labor market outcomes of their children. The results are consistent with the crowd-out of self-care for the marginal recipient, highlighting the need to assess the heterogeneous effects of home-care subsidies.

More on this topic

BFI Working Paper·Feb 4, 2025

Local GDP Estimates Around the World

Esteban Rossi-Hansberg and Jialing Zhang
Topics: COVID-19, Economic Mobility & Poverty
BFI Working Paper·Jan 29, 2025

Toward an Understanding of Discrimination When Multiple Channels Exist

Majid Ahmadi, Gwen-Jirō Clochard, Jeff Lachman, and John List
Topics: Economic Mobility & Poverty
BFI Working Paper·Dec 9, 2024

A Theory of How Workers Keep Up With Inflation

Hassan Afrouzi, Andres Blanco, Andres Drenik, and Erik Hurst
Topics: Economic Mobility & Poverty