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Micro-econometric analysis of care for the dependent elderly in France : How do formal and informal care interact ?

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  • Arnault, Louis
  • Goltz, Andreas
  • Wittwer, Jérôme
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    Abstract

    This paper focuses on the trade-off between formal care and informal care for disabled elderly people living in the community. We propose a simple microeconomic model which describes the simultaneous decision process between potential informal caregivers and disabled elderly person living at home. The model predicts a strict substitution between the two kinds of care. To test the substitution e ffect and assess its intensity, we estimate a recursive simultaneous equation model linked by a copula function, using data from the French\ Handicap Santé Ménages " survey (2008). In contrast with previous literature, the estimated model allows to simultaneously identify both potential causality directions. Thanks to the copula function, strong assumptions about a linear link between the two residuals of both equations do not have to be made. Our results con firm that informal and formal home care are globally substitutes. Nevertheless, the predicted increase of formal care following a reduction of one hour of informal care remains very small. Informal care supply is also weakly sensitive to variations of formal care hours: The substitution e ffect is high only for individuals receiving much more informal than formal care.

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    File URL: http://basepub.dauphine.fr/xmlui/bitstream/123456789/9534/1/LTC_Arnault_Goltz_Wittwer.pdf
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    Bibliographic Info

    Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/9534.

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    Date of creation: Jun 2011
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    Handle: RePEc:dau:papers:123456789/9534

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    Related research

    Keywords: Long-term Care; Copula Function; Simultaneous Equations Model; Formal Care; Informal Care;

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    1. Gary S. Becker, 1991. "Habits, Addictions, and Traditions," University of Chicago - George G. Stigler Center for Study of Economy and State 71, Chicago - Center for Study of Economy and State.
    2. K. Bolin & B. Lindgren & P. Lundborg, 2008. "Informal and formal care among single-living elderly in Europe," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 393-409.
    3. Liliana E. Pezzin & Barbara Steinberg Schone, 1999. "Intergenerational Household Formation, Female Labor Supply and Informal Caregiving: A Bargaining Approach," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 475-503.
    4. Van Houtven, Courtney Harold & Norton, Edward C., 2004. "Informal care and health care use of older adults," Journal of Health Economics, Elsevier, vol. 23(6), pages 1159-1180, November.
    5. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
    6. Charles, Kerwin Kofi & Sevak, Purvi, 2005. "Can family caregiving substitute for nursing home care?," Journal of Health Economics, Elsevier, vol. 24(6), pages 1174-1190, November.
    7. Bonsang, Eric, 2009. "Does informal care from children to their elderly parents substitute for formal care in Europe?," Journal of Health Economics, Elsevier, vol. 28(1), pages 143-154, January.
    8. Van Houtven, Courtney Harold & Norton, Edward C., 2008. "Informal care and Medicare expenditures: Testing for heterogeneous treatment effects," Journal of Health Economics, Elsevier, vol. 27(1), pages 134-156, January.
    9. repec:sae:ecolab:v:16:y:2006:i:2:p:1-2 is not listed on IDEAS
    10. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November.
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