Who Has Benefited from Nursing Home Expansion in Japan?: The Effects of Government Supply-Side Intervention in the Elderly Care Market

This study analyzes the relation between the labor force participation of caregivers and the provision of informal in-home elderly care. In Japan, the national government both regulates the market entry of nursing home suppliers and intervenes in the supply side of the eldercare market. Using exogenous variations in this supply side intervention, our analysis finds that the Japanese policy of expanding nursing homes has increased the labor force participation of female workers with low opportunity costs in the labor market while simultaneously reducing their provision of informal care. As the per capita expense of nursing home care is higher than the wage income of most non-regular female workers who tend to provide the bulk of informal in-home care, one may reasonably conclude that the capacity of public nursing homes in Japan has expanded excessively, putting unnecessary pressure both on the Japanese budget and the personal provision of eldercare services.