Working Paper: NBER ID: w16076
Authors: Gopi Shah Goda; Ezra Golberstein; David C. Grabowski
Abstract: This paper estimates the impact of income on the long-term care utilization of elderly Americans using a natural experiment that led otherwise similar retirees to receive significantly different Social Security payments based on their year of birth. Using data from the 1993 and 1995 waves of the AHEAD, we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services. We find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization. The magnitude of these estimates suggests that moderate reductions in post-retirement income would significantly alter long-term utilization patterns among elderly individuals.
Keywords: long-term care; social security; elderly; income shocks; health economics
JEL Codes: H55; I1; J14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Permanent income shock (G59) | Nursing home utilization (J14) |
| Permanent income shock (G59) | Paid home care services utilization (I11) |
| Social security income (H55) | Nursing home utilization (J14) |
| Social security income (H55) | Paid home care services utilization (I11) |