IDEAS home Printed from https://ideas.repec.org/a/eee/jjieco/v24y2010i1p99-115.html
   My bibliography  Save this article

On the consumption insurance effects of long-term care insurance in Japan: Evidence from micro-level household data

Author

Listed:
  • Iwamoto, Yasushi
  • Kohara, Miki
  • Saito, Makoto

Abstract

Using micro-level household data in the 2001 Comprehensive Survey of the Living Conditions of the People on Health and Welfare compiled by the Japanese Ministry of Health, Labor and Welfare, this paper examines how having a household member in need of long-term nursing care can result in welfare losses measured in terms of consumption. In so doing, this study evaluates the role of the public long-term care insurance scheme implemented in Japan in April 2000. The results indicate that when households include a disabled family member, household consumption net of long-term care costs do not decrease as much as before the introduction of long-term care insurance. Further, when compared with the surveys conducted in 1998, the adverse effects on consumption net of long-term care costs have become much weaker. These findings suggest that the introduction of social insurance in 2000 helped Japanese households to reduce the welfare losses associated with a disabled family member.

Suggested Citation

  • Iwamoto, Yasushi & Kohara, Miki & Saito, Makoto, 2010. "On the consumption insurance effects of long-term care insurance in Japan: Evidence from micro-level household data," Journal of the Japanese and International Economies, Elsevier, vol. 24(1), pages 99-115, March.
    • Handle: RePEc:eee:jjieco:v:24:y:2010:i:1:p:99-115
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0889-1583(09)00069-0
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Raj Chetty & Adam Looney, 2007. "Income Risk and the Benefits of Social Insurance: Evidence from Indonesia and the United States," NBER Chapters, in: Fiscal Policy and Management in East Asia, pages 99-121, National Bureau of Economic Research, Inc.
    2. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, vol. 62(3), pages 539-591, May.
    3. Brown, Jeffrey R. & Finkelstein, Amy, 2007. "Why is the market for long-term care insurance so small?," Journal of Public Economics, Elsevier, vol. 91(10), pages 1967-1991, November.
    4. Olivia S. Mitchell & John Piggott & Satoshi Shimizutani, 2004. "Aged-Care Support in Japan: Perspectives and Challenges," NBER Working Papers 10882, National Bureau of Economic Research, Inc.
    5. repec:bla:econom:v:72:y:2005:i:3:p:431-452 is not listed on IDEAS
    6. Hans G. Bloemen & Elena G. F. Stancanelli, 2005. "Financial Wealth, Consumption Smoothing and Income Shocks Arising from Job Loss," Economica, London School of Economics and Political Science, vol. 72(287), pages 431-452, August.
    7. Murphy, Kevin M & Topel, Robert H, 2002. "Estimation and Inference in Two-Step Econometric Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 88-97, January.
    8. Paul Gertler & Jonathan Gruber, 2002. "Insuring Consumption Against Illness," American Economic Review, American Economic Association, vol. 92(1), pages 51-70, March.
    9. Takatoshi Ito & Andrew K. Rose, 2007. "Fiscal Policy and Management in East Asia," NBER Books, National Bureau of Economic Research, Inc, number ito_07-1.
    10. Cochrane, John H, 1991. "A Simple Test of Consumption Insurance," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 957-976, October.
    11. Mellor, Jennifer M., 2001. "Long-term care and nursing home coverage: are adult children substitutes for insurance policies?," Journal of Health Economics, Elsevier, vol. 20(4), pages 527-547, July.
    12. Amy Finkelstein & Kathleen McGarry & Amir Sufi, 2005. "Dynamic Inefficiencies in Insurance Markets: Evidence from Long-Term Care Insurance," American Economic Review, American Economic Association, vol. 95(2), pages 224-228, May.
    13. Sloan, Frank A. & Thomas J. Hoerger & Gabriel Picone, 1996. "Effects of Strategic Behavior and Public Subsidies on Families' Savings and Long-Term Care Decisions," Working Papers 96-01, Duke University, Department of Economics.
    14. Stefan Dercon & Pramila Krishnan, 2000. "In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 688-727, August.
    15. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-168, February.
    16. Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-473, June.
    17. David M. Cutler, 1993. "Why Doesn't the Market Fully Insure Long-Term Care?," NBER Working Papers 4301, National Bureau of Economic Research, Inc.
    18. Wagstaff, Adam, 2007. "The economic consequences of health shocks: Evidence from Vietnam," Journal of Health Economics, Elsevier, vol. 26(1), pages 82-100, January.
    19. Gruber, Jonathan, 1997. "The Consumption Smoothing Benefits of Unemployment Insurance," American Economic Review, American Economic Association, vol. 87(1), pages 192-205, March.
    20. Norton, Edward C., 2000. "Long-term care," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 17, pages 955-994, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Go Kotera & Saisuke Sakai, 2017. "Complementarity between Merit Goods and Private Consumption: Evidence from estimated DSGE model for Japan," KIER Working Papers 978, Kyoto University, Institute of Economic Research.
    2. Kim, Hoolda & Mitra, Sophie, 2022. "The Economic and Health Effects of Long-Term Care Insurance: New Evidence from Korea," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    3. Lianjie Wang & Yao Tang, 2024. "RETRACTED ARTICLE: The impact of long-term care insurance on household consumption and sustainability among aged people in China," Economic Change and Restructuring, Springer, vol. 57(2), pages 1-32, April.
    4. Ryotaro Fukahori & Tadashi Sakai & Kazuma Sato, 2015. "The Effects of Incidence of Care Needs in Households on Employment, Subjective Health, and Life Satisfaction among Middle-aged Family Members," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(5), pages 518-545, November.
    5. Tomoaki Yamada & Minchung Hsu & Gary D. Hansen, 2011. "Financing Health Care in Japan: The Impact of an Aging Population," 2011 Meeting Papers 717, Society for Economic Dynamics.
    6. Sugawara, Shinya & Nakamura, Jiro, 2014. "Can formal elderly care stimulate female labor supply? The Japanese experience," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 98-115.
    7. Shinya Sugawara & Jiro Nakamura, 2013. "Is Elderly Care Socialized in Japan? Analyzing the Effects of the 2006 Amendment to the LTCI on the Female Labor Supply," CIRJE F-Series CIRJE-F-888, CIRJE, Faculty of Economics, University of Tokyo.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yasushi Iwamoto & Miki Kohara & Makoto Saito, 2006. "On the Consumption Insurance Effects of Long-term Care Insurance In Japan: Evidence from Micro Household Data," CARF F-Series CARF-F-081, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo.
    2. Belén Sáenz de Miera Juárez, 2017. "The role of public health insurance in protecting against the costs of ill health," WIDER Working Paper Series 003, World Institute for Development Economic Research (UNU-WIDER).
    3. Raj Chetty & Amy Finkelstein, 2012. "Social Insurance: Connecting Theory to Data," NBER Working Papers 18433, National Bureau of Economic Research, Inc.
    4. Rinaldo Brau & Matteo Lippi Bruni, 2008. "Eliciting the demand for long‐term care coverage: a discrete choice modelling analysis," Health Economics, John Wiley & Sons, Ltd., vol. 17(3), pages 411-433, March.
    5. Islam, Asadul & Maitra, Pushkar, 2012. "Health shocks and consumption smoothing in rural households: Does microcredit have a role to play?," Journal of Development Economics, Elsevier, vol. 97(2), pages 232-243.
    6. Owen (O.A.) O'Donnell, 2019. "Financial Protection Against Medical Expense," Tinbergen Institute Discussion Papers 19-010/V, Tinbergen Institute.
    7. Marcel Fafchamps & Aditya Shrinivas, 2022. "Risk Pooling and Precautionary Saving in Village Economies," NBER Working Papers 30128, National Bureau of Economic Research, Inc.
    8. Jeffrey R. Brown & Norma B. Coe & Amy Finkelstein, 2007. "Medicaid Crowd-Out of Private Long-Term Care Insurance Demand: Evidence from the Health and Retirement Survey," NBER Chapters, in: Tax Policy and the Economy, Volume 21, pages 1-34, National Bureau of Economic Research, Inc.
    9. Dalton, Michael & LaFave, Daniel, 2017. "Mitigating the consequences of a health condition: The role of intra- and interhousehold assistance," Journal of Health Economics, Elsevier, vol. 53(C), pages 38-52.
    10. Manoj Mohanan, 2008. "Consumption Smoothing and Household Responses: Evidence from Random Exogenous Health Shocks," CID Working Papers 23, Center for International Development at Harvard University.
    11. Thomas J. Kniesner & James P. Ziliak, 2002. "Tax Reform and Automatic Stabilization," American Economic Review, American Economic Association, vol. 92(3), pages 590-612, June.
    12. Neelsen, Sven & Limwattananon, Supon & O'Donnell, Owen & van Doorslaer, Eddy, 2019. "Universal health coverage: A (social insurance) job half done?," World Development, Elsevier, vol. 113(C), pages 246-258.
    13. Paul Gertler & Jonathan Gruber, 2002. "Insuring Consumption Against Illness," American Economic Review, American Economic Association, vol. 92(1), pages 51-70, March.
    14. Liu, Kai, 2016. "Insuring against health shocks: Health insurance and household choices," Journal of Health Economics, Elsevier, vol. 46(C), pages 16-32.
    15. Islam, Asad & Nguyen, Chau, 2018. "Do networks matter after a natural disaster? A study of resource sharing within an informal network after Cyclone Aila," Journal of Environmental Economics and Management, Elsevier, vol. 90(C), pages 249-268.
    16. Courbage, Christophe & Eeckhoudt, Louis, 2012. "On insuring and caring for parents’ long-term care needs," Journal of Health Economics, Elsevier, vol. 31(6), pages 842-850.
    17. Hasna Khemili & Mounir Belloumi, 2018. "Social Security and Fighting Poverty in Tunisia," Economies, MDPI, vol. 6(1), pages 1-17, February.
    18. sowmya, 2015. "Health Shocks and Short-Term Consumption GrowthAuthor-Name: Sowmya Dhanaraj," Working Papers 2015-112, Madras School of Economics,Chennai,India.
    19. Raj Chetty, 2006. "A Bound on Risk Aversion Using Labor Supply Elasticities," NBER Working Papers 12067, National Bureau of Economic Research, Inc.
    20. Lambregts, Timo R. & Schut, Frederik T., 2020. "Displaced, disliked and misunderstood: A systematic review of the reasons for low uptake of long-term care insurance and life annuities," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).

    More about this item

    Keywords

    Social insurance Consumption insurance Long-term care insurance;

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jjieco:v:24:y:2010:i:1:p:99-115. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622903 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.