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Long-Term Care Insurance Policy and Development of Elderly Care Enterprises in China

Author

Listed:
  • Yang, Tianli

    (Renmin University of China)

  • Zhao, Zhong

    (Renmin University of China)

Abstract

This paper examines the impact of Long-Term Care Insurance (LTCI) policy on the development of elderly care enterprises in China. Employing a policy shock and a difference-in-differences design, we find that the implementation of LTCI significantly promotes the the number of new entries and survival rate of elderly care enterprises, particularly for individual businesses, enterprises in the health and social work industry, and those located in eastern regions. Notably, service-only LTCI policy exhibits stronger effect on the development of elderly care enterprises compared to policy combining service and cash benefits. Mechanism analysis suggests that LTCI stimulates market demand for formal elderly care services and increases government expenditures on social security and healthcare, both of which drive the development of elderly care enterprises. We also find that LTCI policy boosts labor demand in the elderly care industry. Overall, our empirical findings suggest that LTCI can help address the shortage of long-term care services and enhance family welfare.

Suggested Citation

  • Yang, Tianli & Zhao, Zhong, 2025. "Long-Term Care Insurance Policy and Development of Elderly Care Enterprises in China," IZA Discussion Papers 18104, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18104
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    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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