Family ties and the crowding out of long-term care insurance
AbstractInsurance for long-term care (LTC) has developed only moderately compared to other areas of welfare, which has been explained variously as the result of market failures, public misconceptions of the risk of LTC needs, and intergenerational contracts. This paper offers a cultural explanation for the limited LTC insurance development in Europe. It argues that family ties, by enhancing informal care-giving duties, inhibit individuals' expected (public and private) insurance coverage. The empirical analysis of the paper exploits cross-country and sub-group variability of a representative database of European Union member states, containing records on LTC coverage and family structure. Drawing upon two measures of familistic culture or family ties, we find a negative association between family ties and expected coverage of LTC for different sub-samples. These results are robust to a set of checks for different definitions of family ties and controls, and for a sub-sample of first- and second-generation migrants. Policy implications suggest that widespread expansion of LTC coverage might need to accommodate existing familistic cultural norms to avoid insurance crowding out. Copyright 2010, Oxford University Press.
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Bibliographic InfoArticle provided by Oxford University Press in its journal Oxford Review of Economic Policy.
Volume (Year): 26 (2010)
Issue (Month): 4 (Winter)
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- Joan Costa-Font, 2011. "Insurance Crowding Out and Long-Term Care Partnerships," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 9(2), pages 52-54, 07.
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CESifo Working Paper Series
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