Long‐term Care Insurance and Carers' Labor Supply – A Structural Model1. (29th May 2015)

• Record Type: Journal Article
• Authors: Geyer, Johannes; Korfhage, Thorben
• Is Part Of: Health economics. Volume 24:Number 9(2015:Sep.)
• Page Start: 1178
• Page End: 1191
• Publication Date: 2015-05-29
• Subjects: Medical economics -- Periodicals; Economics, Medical -- Periodicals; Health Care Costs -- Periodicals; Health Policy -- economics -- Periodicals; Health Services -- economics -- Periodicals; 362.1
• DOI: 10.1002/hec.3200
• Languages: English
• ISSNs: 1057-9230

Abstract

<abstract abstract-type="main" id="hec3200-abs-0001"> <title>Summary</title> <p id="hec3200-para-0001">In Germany, individuals in need of long‐term care receive support through benefits of the long‐term care insurance. A central goal of the insurance is to support informal care provided by family members. Care recipients can choose between benefits in kind (formal home care services) and benefits in cash. From a budgetary perspective, family care is often considered a cost‐saving alternative to formal home care and to stationary nursing care. However, the opportunity costs resulting from reduced labor supply of the carer are often overlooked. We focus on the labor supply decision of family carers and the incentives set by the long‐term care insurance. We estimate a structural model of labor supply and the choice of benefits of family carers. We find that benefits in kind have small positive effects on labor supply. Labor supply elasticities of cash benefits are larger and negative. If both types of benefits increase, negative labor supply effects are offset to a large extent. However, the average effect is significantly negative. Copyright © 2015 John Wiley &amp; Sons, Ltd.</p> </abstract>