Municipalities’ Decision to Care: At Home or in a Nursing Home

Theis Theisen ()
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Theis Theisen: University of Agder

International Advances in Economic Research, 2020, vol. 26, issue 4, No 1, 327-342

Abstract: Abstract An almost ideal demand system for long-term care is estimated using data from Norway, where the split of long-term care between home care and care in nursing homes is determined by municipalities. Previous literature has barely addressed what determines municipalities’ or other organizations’ allocations of resources to the sub-sectors of long-term care. The results show that home care is a luxury, while nursing home care is a necessity with respect to total expenditures on long-term care. Municipalities respond to high unit costs for home care by reducing that type of care. Municipalities are highly responsive to variations in the need for the two types of care and seem to provide a well-functioning insurance mechanism for long-term care. In the previous empirical literature, municipalities’ role as providers of insurance against the consequences of disabilities and frailty has received scant attention.

Keywords: Local government spending; Long-term-care; Home care; Nursing home care (search for similar items in EconPapers)
JEL-codes: H72 H75 I13 I18 J14 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s11294-020-09806-z

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