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Public pensions and LTC insurance with family solidarity

Author

Listed:
  • Nishimura, Y.

    (University of Osaka)

  • Pestieau, Pierre

    (Université catholique de Louvain, LIDAM/CORE, Belgium)

Abstract

As income rises, the risk of disability in old age declines, while life expectancy increases. These correlations strengthen the case for public long-term care (LTC) insurance over public pension systems. However, this perspective shifts when considering family solidarity—specifically, the informal care provided by spouses and children to elderly relatives. When viewed through the lens of altruistic caregiving motives, the argument for social LTC insurance becomes more nuanced. The interplay between formal and informal care is a key factor in shaping optimal policy. In this paper, we demonstrate that when family members reliably provide informal care, the design of a comprehensive public LTC system depends on the existence of a private insurance and on the degree of substitutability between informal and formal care.

Suggested Citation

  • Nishimura, Y. & Pestieau, Pierre, 2025. "Public pensions and LTC insurance with family solidarity," LIDAM Discussion Papers CORE 2025012, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2025012
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    References listed on IDEAS

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    2. Pestieau, Pierre, 2026. "The economics of long-term care," LIDAM Discussion Papers CORE 2026001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. Chiara Canta & Helmuth Cremer & Firouz Gahvari, 2020. "“Honor thy father and thy mother” or not: uncertain family aid and the design of social long term care insurance," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 55(4), pages 687-734, December.
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    9. Justina Klimaviciute & Sergio Perelman & Pierre Pestieau & Jerome Schoenmaeckers, 2017. "Caring for dependent parents: Altruism, exchange or family norm?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 835-873, July.
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    Cited by:

    1. Pestieau, Pierre, 2026. "The economics of long-term care," LIDAM Discussion Papers CORE 2026001, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H5 - Public Economics - - National Government Expenditures and Related Policies

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