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Long-term care insurance policy and the development of elderly care enterprises in China

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  • Yang, Tianli
  • Zhao, Zhong

Abstract

This paper examines the effect of Long-Term Care Insurance (LTCI) policy on the development of elderly care enterprises in China. Exploiting a policy shock and employing a difference-in-differences design, we find that the implementation of LTCI policy significantly promotes the number of new entries and survival rate of elderly care enterprises, particularly for individual businesses, enterprises in health and social work industry, and those located in eastern region. Notably, service-only LTCI policy exhibits a stronger effect on the development of elderly care enterprises than the policy combining service and cash benefits. Mechanism analysis suggests that LTCI stimulates market demand for formal care services and increases government expenditures on social security and healthcare, both of which drive the development of elderly care enterprises. We also find that LTCI policy boosts labor demand in the elderly care industry. Overall, our empirical findings suggest that LTCI can help address the shortage of long-term care services and enhance family welfare.

Suggested Citation

  • Yang, Tianli & Zhao, Zhong, 2025. "Long-term care insurance policy and the development of elderly care enterprises in China," China Economic Review, Elsevier, vol. 94(PB).
    • Handle: RePEc:eee:chieco:v:94:y:2025:i:pb:s1043951x25002226
    DOI: 10.1016/j.chieco.2025.102564
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    Keywords

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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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