Long-Term Care Insurance and Carers' Labor Supply: A Structural Model

33 Pages Posted: 21 Oct 2014

See all articles by Johannes Geyer

Johannes Geyer

German Institute for Economic Research (DIW Berlin)

Thorben Korfhage

Rhine-Westphalia Institute for Economic Research (RWI-Essen)

Date Written: October 2014

Abstract

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 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.

Keywords: labor supply, long-term care, long-term care insurance, structural model

JEL Classification: J22, H31, I13

Suggested Citation

Geyer, Johannes and Korfhage, Thorben, Long-Term Care Insurance and Carers' Labor Supply: A Structural Model (October 2014). DIW Berlin Discussion Paper No. 1421, Available at SSRN: https://ssrn.com/abstract=2512199 or http://dx.doi.org/10.2139/ssrn.2512199

Johannes Geyer (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?uid=jgeyer&language=en

Thorben Korfhage

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
39
Abstract Views
559
PlumX Metrics