Who Has Benefited from Nursing Home Expansion in Japan?: The Effects of Government Supply-Side Intervention in the Elderly Care Market

Abstract

This study analyzes the relationship between the labor force participation of caregivers and the provision of informal in-home elderly care. In Japan, the national government regulates the market entry of nursing home suppliers, and accordingly intervenes in the supply side of the elderly care market. Using exogenous variations in this supply side intervention, our analysis finds that the Japanese policy of expanding nursing homes has increased the labor force participation of female workers with low opportunity costs in the labor market, but simultaneously reduced their provision of informal care. As the per capita expense of nursing home care is higher than the wage income of most non-regular female workers who tend to provide the bulk of informal in-home care, one may reasonably conclude that the capacity of public nursing homes in Japan has expanded excessively, putting unnecessary pressure on both the Japanese budget and the personal provision of eldercare services.

Keywords: long-term care insurance system, informal elderly care, labor supply, medical expenditure, regulation

JEL Classification: H51, I18, J14, J18, J22