Does the amount of formal care affect informal care? Evidence among over-60s in France.

This paper investigates the causal effect of the amount of formal care used on the informal care received by formal care users. We use an original instrument for formal care volume based on local disparities (NUTS 3 level, 96 units) in the price of formal care. Using the French CARE survey, we use a two-part model to assess the effect of formal care on the extensive and the intensive margin of informal care. An increase in the amount of formal care is found to be associated with a small decrease in the probability of using informal care. Heterogeneity tests show that this negative effect is mainly driven by help for daily activities provided by women. At the intensive margin, informal care is not significantly affected by the amount of formal care. Reforms increasing subsidies for formal care can thus be suspected to have a limited effect on informal care arrangements.