The Financial Support for Long-Term Elderly Care and Household Savings Behaviour

43 Pages Posted: 4 Sep 2015

See all articles by Asako Ohinata

Asako Ohinata

University of Leicester - Department of Economics

Matteo Picchio

Marche Polytechnic University - Department of Economic and Social Science; IZA Institute of Labor Economics; SHERPPA - Ghent University

Abstract

We analyse how the financial support for long-term elderly care affects the level of household savings. Using a difference-in-differences estimator, we investigate the 2002 Scottish reform, which introduced free formal personal care for all the elderly aged 65 and above residing in Scotland. Our semiparametric estimation technique allows the policy effects to be flexibly estimated across age groups. We find that the Scottish policy reduced the average household saving by about £7,200. Moreover, the estimated effects are heterogeneous across age groups of the head of household: these effects are particularly strong among those aged between 40 and 60. The largest effect is observed at age 49 with the reduction in the average household saving by £12,764.

Keywords: long-term elderly care, ageing, means tested financial support, saving, wealth, difference-in-differences

JEL Classification: C21, D14, I18, J14

Suggested Citation

Ohinata, Asako and Picchio, Matteo, The Financial Support for Long-Term Elderly Care and Household Savings Behaviour. IZA Discussion Paper No. 9237, Available at SSRN: https://ssrn.com/abstract=2655278 or http://dx.doi.org/10.2139/ssrn.2655278

Asako Ohinata (Contact Author)

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Matteo Picchio

Marche Polytechnic University - Department of Economic and Social Science ( email )

Piazzale Martelli, 8
60121 Ancona
Italy
+39 071 220 7176 (Phone)

HOME PAGE: http://www.univpm.it/matteo.picchio

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

SHERPPA - Ghent University ( email )

Tweekerkenstraat 2
Ghent, B-9000
Belgium

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