Public pensions and LTC insurance with family solidarity

Y. Nishimura and Pierre Pestieau
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Y. Nishimura: University of Osaka
Pierre Pestieau: Université catholique de Louvain, LIDAM/CORE, Belgium

No 2025012, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: As income rises, the risk of disability in old age declines, while life expectancy increases. These correlations strengthen the case for public long-term care (LTC) insurance over public pension systems. However, this perspective shifts when considering family solidarity—specifically, the informal care provided by spouses and children to elderly relatives. When viewed through the lens of altruistic caregiving motives, the argument for social LTC insurance becomes more nuanced. The interplay between formal and informal care is a key factor in shaping optimal policy. In this paper, we demonstrate that when family members reliably provide informal care, the design of a comprehensive public LTC system depends on the existence of a private insurance and on the degree of substitutability between informal and formal care.

Keywords: Long-term care; mortality risk; disability risk; informal care (search for similar items in EconPapers)
JEL-codes: H2 H5 (search for similar items in EconPapers)
Pages: 16
Date: 2025-06-09
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2025012

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