Economies of Density, Team Synergies and Unobserved Heterogeneity: A Study of Home Care Services

Bernard Bensaid, Solen Croiset and Robert Gary-Bobo ()

No 9864, CESifo Working Paper Series from CESifo

Abstract: In the home-care services industry, caregivers drive to visit patients scattered in a district and deliver various care services at the patient’s home. We use a unique data set, with a standard panel structure, recording the hours of service and the exact number of miles traveled by each employee. The estimated average transportation cost curves, giving the ratio of miles traveled per hour of service, as a function of hours of service at the patient’s home, typically exhibit economies of density. These results suggest that the home-care sector is characterized by excess entry and that a form of franchise-bidding regulation could be appropriate. We study the unobserved heterogeneity of employees and use a quadratic-inlogs, finite-mixture model with latent groups to uncover a finite number of employee types with different cost curves. Some types, but not all, have U-shaped average cost curves yielding an aggregate average transportation cost that is itself U-shaped. Economies of density are mainly due to team synergies operating at the district level. We also show that our model can be interpreted as a test of organizational efficiency based on the Beardwood-Halton-Hammersley (1959) theorem of combinatorial optimization.

Keywords: home care services; elderly; economies of scale; economies of density; transportation costs; Beardwood-Halton-Hammersley theorem; applied econometrics; panel data; unobserved heterogeneity; finite mixture models; entropy criteria (search for similar items in EconPapers)
JEL-codes: I11 I18 L22 L23 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eff
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.cesifo.org/DocDL/cesifo1_wp9864.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9864

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().