Optimal long-term care policy in an intergenerational exchange setting

Akira Yakita

Research in Economics, 2019, vol. 73, issue 4, 321-328

Abstract: We examine the optimality of public long-term care policy, incorporating an exchange game between elderly parents and adult children and transfer-seeking competition among siblings, instead of children's altruism. Results reveal that when children compete to obtain more valuable bequests from parents in exchange for elderly care, public long-term care policy is optimal if government can provide long-term care more efficiently than children can, thereby reducing parental bequests, possibly to zero. This is likely to be the case when children's wages are high. Formal long-term care might not be necessary if parents can receive adequate informal care in exchange for bequests to children with low wages.

Keywords: Bequests; Exchange model of intergenerational transfers; Long-term care insurance; Transfer-seeking children (search for similar items in EconPapers)
JEL-codes: D15 H20 H50 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:73:y:2019:i:4:p:321-328

DOI: 10.1016/j.rie.2019.10.002

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