The Economics of Informal Care

Abstract

Across the globe, the most common means of supporting older disabled adults in their homes is through “informal care.” An informal carer is a family member or friend, including children or adults, who help another person because of their illness, frailty, or disability. There is a rich economics literature on the direct benefits of caregiving, including allowing the care recipient to remain at home for longer than if there was no informal care provided. There is also a growing literature outlining the associated costs of care provision. Although informal care helps individuals with disabilities to remain at home and is rewarding to many carers, there are often negative effects such as depression and lost labor market earnings that may offset some of these rewards. Economists have taken several approaches to quantify the net societal benefit of informal care that consider the degree of choice in caregiving decisions and all direct and indirect benefits and costs of informal care.