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Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch

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  • Gopi Shah Goda
  • Ezra Golberstein
  • David C. Grabowski

Abstract

This paper estimates the impact of income on the long-term care utilization of elderly Americans using a natural experiment that led otherwise similar retirees to receive significantly different Social Security payments based on their year of birth. Using data from the 1993 and 1995 waves of the AHEAD, we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services. We find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization. The magnitude of these estimates suggests that moderate reductions in post-retirement income would significantly alter long-term utilization patterns among elderly individuals.

Suggested Citation

  • Gopi Shah Goda & Ezra Golberstein & David C. Grabowski, 2010. "Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch," NBER Working Papers 16076, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:16076
    Note: AG EH PE
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I1 - Health, Education, and Welfare - - Health
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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