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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.

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Paper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2012-13.

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Date of creation: Jun 2012
Date of revision:
Handle: RePEc:stl:stledp:2012-13
Contact details of provider: Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
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  1. 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 Working Paper Series 1908, CESifo Group Munich.
  2. Helmut Rainer & Thomas Siedler, 2005. "O Brother, Where Art Thou? The Effects of Having a Sibling on Geographic Mobility and Labor Market Outcomes," CRIEFF Discussion Papers 0513, Centre for Research into Industry, Enterprise, Finance and the Firm.
  3. Steven Stern & Maxim Engers, . "Long-Term Care and Family Bargaining," Virginia Economics Online Papers 320, University of Virginia, Department of Economics.
  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. 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.
  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. 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.
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