Does home care for dependent elderly people improve their mental health?

While theoretical models on long-term care decisions assume that the health production function of dependent elderly depends positively on the care received, it has not received much attention in the empirical literature. We estimate the effects of both informal and formal home care on the mental health of elderly individuals in France needing help with daily activities. We adjust for the endogeneity of care with instrumental variables, using characteristics of adult children and geographical disparities in access to public long-term care coverage. The results show that informal care reduces the risk of depression of dependent elderly and that formal care increases their general mental health.