The Impact of Macroeconomic Conditions on Long-Term Care: Evidence on Prices

Johannes Geyer, Peter Haan and Mia Teschner

No 80, Berlin School of Economics Discussion Papers from Berlin School of Economics

Abstract: The price of institutional long-term care is a key determinant of the demand for both formal and informal long-term care. In this paper, we examine how the regional unemployment rate as a proxy for macroeconomic conditions influences these prices. Our analysis draws on administrative data that provide detailed information on all nursing homes and ambulatory care services, as well as all recipients of long-term care benefits in Germany. For identification, we exploit variation in macroeconomic conditions - measured by district-level unemployment rates over time - using a panel data approach with facility and time fixed effects. Our empirical findings indicate that higher unemployment rates lead to increased prices for permanent long-term care, including accommodation and meal costs in nursing homes. We provide evidence for the mechanisms underlying these price effects. While we find no significant impact of macroeconomic conditions on employment, working hours, or quality of care in nursing homes, our results suggest that higher unemployment rates raise nursing home prices through changes in the composition of patients. Specifically, economic downturns trigger a shift from recipients with lower levels of impairment to those requiring more labor-intensive care. Additionally, we observe a substitution effect, whereby low-impairment patients increasingly opt for ambulatory and informal home care instead of institutional care.

Keywords: Long-Term Care; Nursing Home Prices; Unemployment Rate; Macroeconomic Conditions; Informal Care (search for similar items in EconPapers)
JEL-codes: E32 I11 J20 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2025-10-28
New Economics Papers: this item is included in nep-age, nep-hea and nep-lma
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Related works:
Working Paper: The Impact of Macroeconomic Conditions on Long-Term Care: Evidence on Prices (2024)
Working Paper: The Impact of Macroeconomic Conditions on Long-Term Care: Evidence on Prices (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:bdp:dpaper:0080

DOI: 10.48462/opus4-5988

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