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Optimal long-term care policy in an intergenerational exchange setting

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  • Yakita, Akira

Abstract

We examine the optimality of public long-term care policy, incorporating an exchange game between elderly parents and adult children and transfer-seeking competition among siblings, instead of children's altruism. Results reveal that when children compete to obtain more valuable bequests from parents in exchange for elderly care, public long-term care policy is optimal if government can provide long-term care more efficiently than children can, thereby reducing parental bequests, possibly to zero. This is likely to be the case when children's wages are high. Formal long-term care might not be necessary if parents can receive adequate informal care in exchange for bequests to children with low wages.

Suggested Citation

  • Yakita, Akira, 2019. "Optimal long-term care policy in an intergenerational exchange setting," Research in Economics, Elsevier, vol. 73(4), pages 321-328.
    • Handle: RePEc:eee:reecon:v:73:y:2019:i:4:p:321-328
    DOI: 10.1016/j.rie.2019.10.002
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    References listed on IDEAS

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    More about this item

    Keywords

    Bequests; Exchange model of intergenerational transfers; Long-term care insurance; Transfer-seeking children;

    JEL classification:

    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General

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