Abstract: Long-term care is often family-provided, leading to intergenerational spillovers from government programs for elder care. Exploiting a nationwide reform in Sweden in 2002, this paper examines how subsidies for elder care services impact both seniors and their children. Using novel municipal-level data on elder care fees, combined with rich registry data in a difference-in-differences design, we find that the share of seniors receiving care in municipalities exposed to a reduction in fees increases. This is accompanied by significant improvements in seniors’ morbidity, as these seniors experience fewer hospitalizations for conditions preventable or treatable outside the hospital. We also document notable labor market effects for seniors’ adult children, who experience an increase in earnings following the reform. This is driven by adult children staying in less flexible, higher-paying jobs. To assess the welfare implications of subsidizing elder care, we build a stylized sufficient statistics model that incorporates informal care. We show that the optimal subsidy level depends on the interplay of three elasticities: the elasticity of elder care utilization, healthcare services, and the labor supply of adult children with respect to the subsidy. Estimating the model, we show that, while costly in the short term, subsidizing elder care becomes self-financing within a decade of implementation.