Working Paper: NBER ID: w21483
Authors: Norma B. Coe; Gopi Shah Goda; Courtney Harold Van Houtven
Abstract: We examine how long-term care insurance (LTCI) affects family outcomes expected to be sensitive to LTCI, including utilization of informal care and spillover effects on children. An instrumental variables approach allows us to address the endogeneity of LTCI coverage. LTCI coverage induces less informal caregiving, suggesting the presence of intra-family moral hazard. We also find that children are less likely to co-reside or live nearby parents with LTCI and more likely to work full-time, suggesting that significant economic gains from private LTCI could accrue to the younger generation.
Keywords: long-term care insurance; family spillovers; informal care; moral hazard; financial transfers
JEL Codes: H51; H75; I13; J12; J14; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| LTCI coverage (G52) | expectations for receiving informal care (I14) |
| LTCI coverage (G52) | utilization of informal caregivers (I11) |
| LTCI coverage (G52) | likelihood of children co-residing with parents (J12) |
| LTCI coverage (G52) | probability of children working full-time (J13) |
| LTCI coverage (G52) | likelihood of parents providing financial transfers to children (D15) |
| LTCI coverage (G52) | part-time work of children (J22) |