Demand of Long-Term Care and benefit eligibility across European countries

In this paper we study how elderly individuals adjust their informal Long-term Care (LTC) utilization to changes in the provision of formal-care. Despite this is crucial to design effective policies of formal elderly-care, empirical evidence is scant due to the lack of credible identification strategies to account for the endogeneity of formal-care. We propose a novel instrument, an index that captures individuals’ eligibility status for the LTC programs implemented in the region of residence. Our estimates, which are robust to a number of different specifications, point to the existence of a substantial unmet demand of care among the elderly.