Formal-care accessibility and grandparental care: a reverse-substitution effect of China's medical-elderly care integration

<title>Abstract</title> <p> Background How the provision of formal care reshapes time allocation within families is under-examined in the economics of ageing. The classical formal–informal care substitution literature treats older people as net recipients of care and studies how formal care crowds out children’s informal care (“classical substitution”). Yet where grandparental childcare is widespread, older people are also providers of care. We argue that improved access to formal care can release the time older people spend <italic>receiving</italic> care and let them reallocate it to grandchild care, a mechanism we term “reverse substitution.” Methods We develop a two-generation time-allocation model and test its predictions using China’s 2016 integrated medical–elderly care pilot as a quasi-natural experiment. Drawing on four waves of the China Health and Retirement Longitudinal Study (CHARLS, 2011–2018), we use a difference-in-differences (DID) design comparing pilot and non-pilot cities to estimate the effect of improved community-based formal-care access on older adults’ probability of providing grandchild care. Robustness is assessed with entropy balancing, Oster bounds, wild-cluster bootstrap, placebo tests, Lee bounds, and Honest DID; mechanisms are probed with a multiple-mediator framework and discriminant tests. Results Under the DID identifying assumptions, older adults in pilot cities were more likely to provide grandchild care: +5.5 percentage points in the covariate-adjusted specification (about a 12% increase over baseline), and + 4.7 to + 6.1 points across specifications. The estimate is robust to covariate rebalancing, unobserved selection (Oster δ = 1), attrition, city-level shocks, and moderate (≤ 50%) deviations from parallel trends, but not to larger deviations. Mechanism evidence is <italic>consistent with</italic> , but does not directly identify, a time-release channel: the health-mediation effect was not significant (interpreted cautiously given the short follow-up), formal care significantly reduced the informal care older adults received, and effects concentrated on time rather than monetary transfers. The reallocation of released time specifically to grandchild care is inferred, not measured. Conclusions We extend the theory of formal-informal care substitution from a one-directional to a bidirectional framework and provide new quasi-experimental evidence on the intergenerational effects of care policy. Policy evaluations that treat health as the sole endpoint risk omitting the family time-allocation consequences of improved care access. </p>