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Long-Term Care and the Housing Market


  • Bell, David
  • Rutherford, Alasdair


This paper examines the combined effects of population ageing and changes in long-term care policy on the housing market. Those needing care prefer to receive it at home rather than in institutional settings. Public authorities prefer to provide care in residential settings which are generally lower cost than institutional care. The trend away from institutional provision towards care at home is endorsed by national governments and by the OECD. Nevertheless, as the number requiring care increases, this policy shift will maintain the level of housing demand above what it would otherwise be. It will also have distributional consequences with individuals less likely to reduce their housing equity to pay for institutional care, which in turn will increase the value of their bequests. Empirical analysis using the UK Family Resources Survey and the British Household Panel Survey shows that household formation effects involving those requiring long-term care are relatively weak and unlikely to significantly offset the effects of this policy shift on the housing market and on the distribution of wealth.

Suggested Citation

  • Bell, David & Rutherford, Alasdair, 2012. "Long-Term Care and the Housing Market," Stirling Economics Discussion Papers 2012-13, University of Stirling, Division of Economics.
  • Handle: RePEc:stl:stledp:2012-13

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    References listed on IDEAS

    1. Helmut Rainer & Thomas Siedler, 2009. "O Brother, Where Art Thou? The Effects of Having a Sibling on Geographic Mobility and Labour Market Outcomes," Economica, London School of Economics and Political Science, vol. 76(303), pages 528-556, July.
    2. Axel Borsch-Supan & Daniel L. McFadden & Reinhold Schnabel, 1996. "Living Arrangements: Health and Wealth Effects," NBER Chapters,in: Advances in the Economics of Aging, pages 193-216 National Bureau of Economic Research, Inc.
    3. Becker, Gary S, 1981. "Altruism in the Family and Selfishness in the Market Place," Economica, London School of Economics and Political Science, vol. 48(189), pages 1-15, February.
    4. Hiedemann, Bridget & Stern, Steven, 1999. "Strategic play among family members when making long-term care decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 40(1), pages 29-57, September.
    5. Maxim Engers & Steven Stern, 2002. "Long-Term Care and Family Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 73-114, February.
    6. David T. Ellwood & Thomas J. Kane, 1990. "The American Way of Aging: An Event History Analysis," NBER Chapters,in: Issues in the Economics of Aging, pages 121-148 National Bureau of Economic Research, Inc.
    7. Liliana E. Pezzin & Robert A. Pollak & Barbara S. Schone, 2007. "Efficiency in Family Bargaining: Living Arrangements and Caregiving Decisions of Adult Children and Disabled Elderly Parents," CESifo Economic Studies, CESifo, vol. 53(1), pages 69-96, March.
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    Cited by:

    1. Costa-Font, Joan & Frank, Richard & Swartz, Katherine, 2017. "Access to long-term care after a wealth shock: evidence from the housing bubble and burst," LSE Research Online Documents on Economics 84212, London School of Economics and Political Science, LSE Library.

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    Long-term care; Housing market; Demographic change; Ageing;

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