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Long-term Care Insurance and Carers' Labor Supply - A Structural Model

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  • Geyer, Johannes
  • Korfhage, Thorben

Abstract

In Germany, individuals in need of long-term care receive support through benefits of the long-term care insurance. A central goal of the insurance is to support informal care provided by family members. Care recipients can choose between benefits in kind (formal home care services) and benefits in cash. From a budgetary perspective family care is a cost-saving alternative to formal home care and to stationary nursing care. However, the opportunity costs resulting from reduced labor supply of the carer are often overlooked. We focus on the labor supply decision of family carers and the incentives set by the long-term care insurance. We estimate a structural model of labor supply and the choice of benefits of family carers. We find that benefits in kind have small positive effects on labor supply. Labor supply elasticities of cash benefits are larger and negative. If both types of benefits increase, negative labor supply effects are offset to a large extent.

Suggested Citation

  • Geyer, Johannes & Korfhage, Thorben, 2014. "Long-term Care Insurance and Carers' Labor Supply - A Structural Model," Ruhr Economic Papers 515, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
  • Handle: RePEc:zbw:rwirep:515
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    References listed on IDEAS

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    Cited by:

    1. Geyer, Johannes & Haan, Peter & Korfhage, Thorben, 2015. "Indirect fiscal effects of long-term care insurance," Ruhr Economic Papers 584, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Victoria Levin & Ana Maria Munoz Boudet & Beth Zikronah Rosen & Tami Aritomi & Julianna Flanagan & Lourdes Rodriguez-Chamussy, 2015. "Why Should We Care about Care?," World Bank Other Operational Studies 29546, The World Bank.
    3. Geyer, Johannes & Korfhage, Thorben, 2015. "Long-term care reform and the labor supply of household members: Evidence from a quasi-experiment," Ruhr Economic Papers 574, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Korfhage, Thorben, 2019. "Long-run consequences of informal elderly care and implications of public long-term care insurance," Ruhr Economic Papers 813, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    5. Geyer, Johannes, 2020. "Notes about Comparing Long-Term Care Expenditures across Countries. Comment on "Financing Long-Term Care: Lessons from Japan"," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 80-82.
    6. Schmitz, Hendrik & Westphal, Matthias, 2017. "Informal care and long-term labor market outcomes," Journal of Health Economics, Elsevier, vol. 56(C), pages 1-18.
    7. Jessen, Robin & König, Johannes, 2018. "Hours risk, wage risk, and life-cycle labor supply," Ruhr Economic Papers 771, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    8. Heger, Dörte & Korfhage, Thorben, 2016. "Care choices in Europe: To each according to his needs?," Ruhr Economic Papers 649, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Fischer, Björn & Müller, Kai-Uwe, 2020. "Time to care? The effects of retirement on informal care provision," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics.
    10. Ziebarth, Nicolas R., 2017. "Social Insurance and Health," IZA Discussion Papers 10918, Institute of Labor Economics (IZA).
    11. Geyer, J.; Korfhage, T.;, 2017. "Long-term care reform and the labor supply of informal caregivers – evidence from a quasi-experiment," Health, Econometrics and Data Group (HEDG) Working Papers 17/20, HEDG, c/o Department of Economics, University of York.
    12. Johannes Geyer & Thorben Korfhage, 2018. "Labor supply effects of long‐term care reform in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 27(9), pages 1328-1339, September.
    13. Fischer, Björn & Müller, Kai-Uwe, 2020. "Time to care? The effects of retirement on informal care provision," Journal of Health Economics, Elsevier, vol. 73(C).

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    More about this item

    Keywords

    labor supply; long-term care; long-term care insurance; structural model;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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