Long-term Care Insurance and Carers' Labor Supply – A Structural Model

Johannes Geyer and Thorben Korfhage

Health, Econometrics and Data Group (HEDG) Working Papers from HEDG, c/o Department of Economics, University of York

Abstract: Germany introduced a new mandatory insurance scheme for long-term care in 1995. From a budgetary perspective family care is a cost-saving alternative to formal home care and to stationary nursing care. Thus, one of the goals of the insurance is to support informal care provided by family members. However, the opportunity costs resulting from reduced labor supply of the carer are often overlooked. We focus on the labor supply decision of carers and the incentives set by the long-term care insurance. Care recipients can chose between benefits in kind and benefits in cash. We estimate a structural model of labor supply and the choice of benefits of caring spouses. We find that benefits in kind have positive effects on labor supply, while for benefits in cash elasticities are negative but not statistically significant. If both types of benefits are increased proportionately, demand for formal care increases. Labor supply is only adjusted by men, but not by women.

Keywords: labor supply; long-term care; long-term care insuranc; , structural model (search for similar items in EconPapers)
JEL-codes: H31 I13 J22 (search for similar items in EconPapers)
Date: 2014-08
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Long‐term Care Insurance and Carers' Labor Supply – A Structural Model (2015)
Working Paper: Long-Term Care Insurance and Carers' Labor Supply: A Structural Model (2014)
Working Paper: Long-Term Care Insurance and Carers' Labor Supply: A Structural Model (2014)
Working Paper: Long-term Care Insurance and Carers' Labor Supply - A Structural Model (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:hectdg:14/14

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