[ Abstract / Highlights ]
This study investigates how changes in formal care availability affect informal caregivers’ well-being, adding to the heated discussion on what constitutes an appropriate level of formal care that is both sustainable and adequate. We leverage a reform of Japan’s public long-term care insurance, which contracted formal care benefits among a group of recipients. Using a difference-in-difference approach with fixed effects to a nationally representative sample of informal caregivers, we examine the aggregated impacts of the reform and how they evolve over time. We find that the reform had a negative impact on caregivers’ well-being, reflected in decreased mobility and stability, and increased stress from financial strains and domestic work. The negative impact was particularly pronounced among female caregivers, while male caregivers experienced an improvement in mental health, particularly those with higher income levels. The reform also led to an increased likelihood of regular caregiving, which may contribute to the well-being decline. Additionally, we find that the reform had negative effects on the well-being of care recipients, indicating that reducing formal care services is unlikely to have any positive impact on either the caregivers or the recipients. The study highlights the importance of considering the well-being of both caregivers and care recipients when evaluating the cost-effectiveness of reducing formal care availability and recommends policies that protect female caregivers against health and financial issues.