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Abstract

This paper examines the relationship between informal caregiving and both cognitive functioning and healthcare utilization among older adults with dementia. Using data from the RAND version of the Health and Retirement Study (HRS), a nationally representative longitudinal panel of U.S. adults over age 50, covering the years 2010 to 2022, I estimate Ordinary Least Squares (OLS) and Instrumental Variables (IV) models to address potential endogeneity in caregiving decisions. The number of children is employed as an instrument for informal care intensity. While OLS estimates suggest a negative association between informal caregiving and cognition, IV estimates show no significant causal effect after controlling for demographic, socioeconomic, and lagged cognition variables. In contrast, IV results indicate that informal care significantly reduces the likelihood of nursing home use, the number of institutional nights, and the probability of institutionalization. No robust causal effects are found for hospital use, doctor visits, or outpatient surgery, although there is some suggestive evidence of a complementary relationship between informal care and home health services. These findings highlight the role of informal caregiving in substituting for institutional care and underscore its importance in long-term care policy for dementia patients. Keywords: Informal Caregiving; Cognitive Decline; Instrumental Variables; Healthcare Utilization: Dementia Patients.