Well-being implications of informal caregiving: Evidence on loneliness and social isolation

While informal care is regarded as an appealing alternative to formal care, it often comes at the expense of the caregiver. Existing studies have primarily focused on the financial implications of informal caregiving with limited attention to its hidden costs, including social aspects. This study contributes to the literature by examining the effects of informal caregiving on loneliness and social isolation using longitudinal data from a large nationally representative household survey in Australia. To study the relationship, we first employ a dynamic difference-indifferences (DID) method, exploiting the variation in the timing of caring across informal caregivers. Second, we complement our analysis with an instrumental variables (IV) method, using eligibility to government-funded Carer Payment as IV. Both strategies show that informal caregiving increases the probability of experiencing loneliness, particularly among female and spousal caregivers. While DID estimates show no effect on social isolation, IV results suggest that caregiving raises social isolation among male compliers, but not females. These findings highlight the hidden social costs of informal caregiving and underscore the need for targeted support policies. JEL codes: I10, I31, J22