Is Caring Productive? The Effect of Adult Social Care on Paid Production in England

Long-term care (LTC) provides essential support to service users and informal carers to improve their quality of life. By improving quality of life, LTC can potentially impact economic growth, for example, it may enable service users of working age and their carers to spend more time in paid employment. This study investigates the effect of publicly-funded LTC expenditure on a measure of paid production across local authorities in England. We analyze yearly data from 2014/15 to 2019/20 using a dynamic panel model estimated by the Arellano-Bond estimator. We find that a £1000 increase in LTC expenditure per client increases paid production per capita by £216 in the short run and by £670 in the long run. These findings may inform policy makers interested in assessing the financial sustainability of LTC policies.