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Micro-econometric analysis of care for the dependent elderly in France : How do formal and informal care interact ?

  • Arnault, Louis
  • Goltz, Andreas
  • Wittwer, Jérôme
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    This paper focuses on the trade-off between formal care and informal care for disabled elderly people living in the community. We propose a simple microeconomic model which describes the simultaneous decision process between potential informal caregivers and disabled elderly person living at home. The model predicts a strict substitution between the two kinds of care. To test the substitution e ffect and assess its intensity, we estimate a recursive simultaneous equation model linked by a copula function, using data from the French\ Handicap Santé Ménages " survey (2008). In contrast with previous literature, the estimated model allows to simultaneously identify both potential causality directions. Thanks to the copula function, strong assumptions about a linear link between the two residuals of both equations do not have to be made. Our results con firm that informal and formal home care are globally substitutes. Nevertheless, the predicted increase of formal care following a reduction of one hour of informal care remains very small. Informal care supply is also weakly sensitive to variations of formal care hours: The substitution e ffect is high only for individuals receiving much more informal than formal care.

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    Paper provided by Paris Dauphine University in its series Economics Papers from University Paris Dauphine with number 123456789/9534.

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    Date of creation: Jun 2011
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    Handle: RePEc:dau:papers:123456789/9534
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    1. Fontaine, Roméo, 2011. "The trade-off between work and informal care in Europe," Economics Papers from University Paris Dauphine 123456789/7941, Paris Dauphine University.
    2. Amemiya, Takeshi, 1974. "Multivariate Regression and Simultaneous Equation Models when the Dependent Variables Are Truncated Normal," Econometrica, Econometric Society, vol. 42(6), pages 999-1012, November.
    3. Van Houtven, Courtney Harold & Norton, Edward C., 2004. "Informal care and health care use of older adults," Journal of Health Economics, Elsevier, vol. 23(6), pages 1159-1180, November.
    4. Becker, G.S., 1991. "Habits, Addictions, and Traditions," University of Chicago - Economics Research Center 91-8, Chicago - Economics Research Center.
    5. Liliana E. Pezzin & Barbara Steinberg Schone, 1999. "Intergenerational Household Formation, Female Labor Supply and Informal Caregiving: A Bargaining Approach," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 475-503.
    6. Eric Bonsang, 2008. "Does Informal Care from Children to their Elderly Parents Substitute for Formal Care in Europe?," CREPP Working Papers 0801, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
    7. Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
    8. Van Houtven, Courtney Harold & Norton, Edward C., 2008. "Informal care and Medicare expenditures: Testing for heterogeneous treatment effects," Journal of Health Economics, Elsevier, vol. 27(1), pages 134-156, January.
    9. K. Bolin & B. Lindgren & P. Lundborg, 2007. "Informal and Formal Care among Single-living Elderly in Europe," Tinbergen Institute Discussion Papers 07-031/3, Tinbergen Institute.
    10. repec:sae:ecolab:v:16:y:2006:i:2:p:1-2 is not listed on IDEAS
    11. Charles, Kerwin Kofi & Sevak, Purvi, 2005. "Can family caregiving substitute for nursing home care?," Journal of Health Economics, Elsevier, vol. 24(6), pages 1174-1190, November.
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