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The Determinants of Exit from Nursing Homes and the Price Elasticity of Nursing Home Care: Evidence from Japanese Micro-level Data


  • Haruko Noguchi
  • Satoshi Shimizutani


This study examines how the price mechanism affects the length of residents' nursing home stay and their destination after exit. The purpose of this analysis is to evaluate policy options to reduce the number of socially institutionalized elderly nursing home residents in Japan. To address these issues, we take advantage of micro-level data from The Survey on Care Service Providers compiled by the Japanese government. Our duration estimates show that the price elasticity of the hazard of exit from welfare care facilities was 1.7 (95% CI: 0.4-3.0) and 1.8 (95% CI: 0.0-3.8) from health care facilities. The probit estimates show that a 1 percentage point increase in copayments leads to an increase in the probability of returning home by 0.04% for patients of welfare care facilities and 3.7% for those of health care facilities. In contrast, the price elasticity of the probability of being re-hospitalized is -3.3% for patients of health care facilities and -1.9% for those of medical care facilities. An appropriate price policy may work well to shorten patients' length of stay and to reduce the number of the socially institutionalized. Since the effects of the introduction of a price mechanism may differ for different types of facilities, public policies aimed at broadening residents' range of choices need to be designed with care and incorporate an appropriate risk adjustment system to provide a safety net for those elderly highly at risk of being socially institutionalized.

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  • Haruko Noguchi & Satoshi Shimizutani, 2005. "The Determinants of Exit from Nursing Homes and the Price Elasticity of Nursing Home Care: Evidence from Japanese Micro-level Data," Hi-Stat Discussion Paper Series d04-67, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:hstdps:d04-67

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    1. Kravis, Irving B, 1984. "Comparative Studies of National Incomes and Prices," Journal of Economic Literature, American Economic Association, vol. 22(1), pages 1-39, March.
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    3. van Zanden, Jan Luiten, 2003. "Rich and poor before the Industrial Revolution: a comparison between Java and the Netherlands at the beginning of the 19th century," Explorations in Economic History, Elsevier, vol. 40(1), pages 1-23, January.
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    5. Bela Balassa, 1964. "The Purchasing-Power Parity Doctrine: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 72, pages 584-584.
    6. Edward Ames & John A. Carlson, 1968. "Production Index Bias As A Measure Of Economic Development," Oxford Economic Papers, Oxford University Press, vol. 20(1), pages 24-37.
    7. Robert Summers & Alan Heston, 1991. "The Penn World Table (Mark 5): An Expanded Set of International Comparisons, 1950–1988," The Quarterly Journal of Economics, Oxford University Press, vol. 106(2), pages 327-368.
    8. Bhagwati, Jagdish N, 1984. "Why Are Services Cheaper in the Poor Countries?," Economic Journal, Royal Economic Society, vol. 94(374), pages 279-286, June.
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    Cited by:

    1. Mitchell Olivia S. & PIGGOTT John & SHIMIZUTANI Satoshi, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," ESRI Discussion paper series 118, Economic and Social Research Institute (ESRI).
    2. Satoshi Shimizutani, 2006. "Japan's Long-term Care Insurance Program: An Overview," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 142(V), pages 23-28.

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