The impact of formal care on informal care for people over 75 in England

In this study, we examine the relationship between formal care provision and informal care receipt from within and outside the household for people over 75 years old using data from the British Household Panel Survey between 1991 and 2009. To address potential concerns about endogeneity of formal care we use a set of instrumental variables including a novel care eligibility variable. We find a negative and statistically significant effect of formal care on informal care from within the household, suggesting a substantial degree of substitutability between these two modes of care. With regards to informal care provided from outside the household, although the effect is still negative, the degree of substitutability is substantially smaller and mostly not statistically significant. These findings support current discussions and policies towards the implementation of an integrated care system, providing grounds for estimates of savings in the cost of informal care enabled by spending on formal care.