Does the expansion of public long-term care funding affect savings behaviour?

The effect of further public caregiving subsidies (and insurance expansions to cover long-term care) on savings and saving behaviour is far from clear. In this paper we take advantage of a policy intervention to study the effect on savings and savings behaviour of the progressive introduction of a universal public long-term care subsidy (Sistema para la Autonomía y Atención a la Dependencia, SAAD) from 2007 in Spain. We draw on a difference-in-difference strategy (DID) to show a contraction of savings after the policy intervention, but only among younguer elders who receive primarily cash benefits (unconditional caregiving allowance) as opposed to home help (ammouting 13-38% of the allowance). Saving reductions of individuals in the second and third quintile of income distribution, those without children and those residing in regions that implemented the reform earlier, drive the effect.