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On the Impact of Long-term Care Insurance on the Behavior of Parents and Children: Theory and Evidence on Japan

Author

Listed:
  • Horioka, Charles Yuji
  • Gahramanov, Emin
  • Tang, Xueli

Abstract

The purpose of this paper is to conduct a theoretical and empirical analysis of how the behavior of parents and children is affected by the presence or absence of long-term care insurance (LTCI). In our empirical analysis, we use micro data from the Japan Household Panel Survey on Consumer Preferences and Satisfaction (JHPS-CPS), formerly known as the Preference Parameter Study, conducted by Osaka University. Japan is an interesting case to analyze because a public LTCI system was introduced there in 2000. Our analysis shows that, in the case of Japan, if parents are eligible for public LTCI benefits, their children will be less likely to be their primary caregiver and that this, in turn, will reduce their children's perceived likelihood of receiving a bequest from them. This result implies that bequests are selfishly or strategically motivated (i.e., that parents leave bequests to their children in order to elicit care from them) and that the introduction of a public LTCI system will reduce the likelihood of children providing care to their parents and through this channel reduce their perceived likelihood of receiving a bequest from them.

Suggested Citation

  • Horioka, Charles Yuji & Gahramanov, Emin & Tang, Xueli, 2024. "On the Impact of Long-term Care Insurance on the Behavior of Parents and Children: Theory and Evidence on Japan," AGI Working Paper Series 2024-16, Asian Growth Research Institute.
    • Handle: RePEc:agi:wpaper:02000105
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    File URL: https://agi.repo.nii.ac.jp/records/2000105
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    File URL: https://agi.repo.nii.ac.jp/record/2000105/files/WP2024-16.pdf
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    Keywords

    Aged care; altruistic bequests; bequests; caregiving; elderly care; family care; formal care; informal care; long-term care; long-term care insurance; parental care; selfish bequests; strategic bequests;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy; Intergenerational Transfers
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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