IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/6547.html
   My bibliography  Save this paper

The Rise in Old Age Longevity and the Market for Long-Term Care

Author

Listed:
  • Darius Lakdawalla
  • Tomas Philipson

Abstract

This paper analyzes how markets for old-age care respond to the aging of populations. We consider how the biological forces, which govern the stocks of frail and healthy persons in a population, interacct with economic forces, which govern the demand and suppoly for labor-intensive care. Many economists have argued that aging will raise the market demand for long-term care, and hence price and quantity through classic market effects. We argue that the direct effect of aging is to lower the demand for market care by incresing the supply of home production. By influencing the length of frail lifetimes, aging may also have a further indirect demand effect, which may reinforce or counteract the direct negative demand effect. By providing healthy spouses, the marriage market provides care-givers for home production of long-term care; therefore, growth in old-age longevity may lower the demand for market production. Growth of elderly males serves to contract the long-term care market becuase it eases the scarcity of men in the old-age marriage market; growth of females serves to expand market care because it worsens the scarcity of men. These predictions lend themselves to an interpretation of the rapid deceleration in output growth that has taken place in the US over the last two decades, despite a constant rate of longevity growth and enormous growth in demand subsidies: since growth in elderly males has risen dramatically relative to growth in elderly females, the rate of long-term care growth has slowed significantly. We test our predictions empirically using state- and county-level evidence on the US market for long-term care in nursing homes over the last three decades. The evidence provides support for our predictions concerning the response in output growth to aging and the contraction of output due to the aging of males.

Suggested Citation

  • Darius Lakdawalla & Tomas Philipson, 1998. "The Rise in Old Age Longevity and the Market for Long-Term Care," NBER Working Papers 6547, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:6547
    Note: AG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w6547.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Axel Borsch-Supan & Laurence J. Kotlikoff & John N. Morris, 1988. "The Dynamics of Living Arrangements of the Elderly," NBER Working Papers 2787, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:6547. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.