Long-Term Care and Births Timing

Pierre Pestieau and Gregory Ponthiere

No 2015026, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Due to the ageing process, the provision of long-term care (LTC) to the dependent elderly has become a major challenge of our epoch. But our societies are also characterized, since the 1970s, by a postponement of births, which, by raising the intergenerational age gap, can affect the provision of LTC by children. In order to examine the impact of those demographic trends on the optimal policy, we develop a four-period OLG model where individuals, who receive children is informal LTC at the old age, must choose, when being young, how to allocate births along their life cycle. It is shown that, in line with empirical evidence, early children provide more LTC to their elderly parents than late children, because of the lower opportunity cost of providing LTC when being retired. When comparing the laissez-faire with the long-run social optimum, it appears that individuals have, at the laissez-faire, too few early births, and too many late births. We then study, in first-best and second-best settings, how the social optimum can be decentralized by encourageing early births, in such a way as to reduce the social burden of LTC provision.

Keywords: Long term care; birth timing; childbearing age; family policy; OLG models (search for similar items in EconPapers)
JEL-codes: E13 J13 J14 (search for similar items in EconPapers)
Date: 2015-06-17
New Economics Papers: this item is included in nep-age and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Long-term care and births timing (2016)
Working Paper: Long-Term Care and Births Timing (2016)
Working Paper: Long-term care and births timing (2016)
Working Paper: Long-term care and births timing (2016)
Working Paper: Long-term care and births timing (2015)
Working Paper: Long-term care and births timing (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2015026

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