IDEAS home Printed from https://ideas.repec.org/p/ide/wpaper/28595.html
   My bibliography  Save this paper

Long term care and capital accumulation: the impact of the State, the market and the family

Author

Listed:
  • Canta, Chiara
  • Pestieau, Pierre
  • Thibault, Emmanuel

Abstract

The rising level of long-term care (LTC) expenditures and their financing sources are likely to impact savings and capital accumulation and henceforth the pattern of growth. This paper studies how the joint interaction of the family, the market and the State influences capital accumulation in a society in which the assistance the children give to dependent parents is triggered by a family norm. We find that, with a family norm in place, the dynamics of capital accumulation differ from the ones of a standard Diamond (1965) model with dependence. For instance, if the family help is sizeably more productive than the other LTC financing sources, a pay-as-you-go social insurance might be a complement to private insurance and foster capital accumulation.

Suggested Citation

  • Canta, Chiara & Pestieau, Pierre & Thibault, Emmanuel, 2014. "Long term care and capital accumulation: the impact of the State, the market and the family," IDEI Working Papers 837, Institut d'Économie Industrielle (IDEI), Toulouse.
    • Handle: RePEc:ide:wpaper:28595
    as

    Download full text from publisher

    File URL: http://idei.fr/sites/default/files/medias/doc/wp/2014/wp_idei_837.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. M.L. Leroux & P. Pestieau, 2014. "Social Security and Family Support," Canadian Journal of Economics, Canadian Economics Association, vol. 47(1), pages 115-143, February.
    2. Gong, Liutang & Li, Hongyi & Wang, Dihai, 2012. "Health investment, physical capital accumulation, and economic growth," China Economic Review, Elsevier, vol. 23(4), pages 1104-1119.
    3. Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2009. "Approaches to Estimating the Health State Dependence of the Utility Function," American Economic Review, American Economic Association, vol. 99(2), pages 116-121, May.
    4. Amy Finkelstein & Erzo F. P. Luttmer & Matthew J. Notowidigdo, 2013. "What Good Is Wealth Without Health? The Effect Of Health On The Marginal Utility Of Consumption," Journal of the European Economic Association, European Economic Association, vol. 11, pages 221-258, January.
    5. Alain Jousten & Barbara Lipszyc & Maurice Marchand & Pierre Pestieau, 2005. "Long-term Care Insurance and Optimal Taxation for Altruistic Children," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 61(1), pages 1-18, March.
    6. Hemmi, Noriyoshi & Tabata, Ken & Futagami, Koichi, 2007. "The long-term care problem, precautionary saving, and economic growth," Journal of Macroeconomics, Elsevier, vol. 29(1), pages 60-74, March.
    7. Donald Cox & Oded Stark, 2007. "On the Demand for Grandchildren: Tied Transfers and the Demonstration Effect," Chapters, in: Luigino Bruni & Pier Luigi Porta (ed.), Handbook on the Economics of Happiness, chapter 18, Edward Elgar Publishing.
    8. Lambrecht, Stephane & Michel, Philippe & Vidal, Jean-Pierre, 2005. "Public pensions and growth," European Economic Review, Elsevier, vol. 49(5), pages 1261-1281, July.
    9. Karen A. Kopecky & Tatyana Koreshkova, 2014. "The Impact of Medical and Nursing Home Expenses on Savings," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(3), pages 29-72, July.
    10. Siciliani Luigi, 2013. "The Economics of Long-Term Care," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 343-375, August.
    11. Canta Chiara & Pestieau Pierre, 2013. "Long-Term Care Insurance and Family Norms," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 14(2), pages 401-428, April.
    12. Ehrlich, Isaac & Lui, Francis T, 1991. "Intergenerational Trade, Longevity, and Economic Growth," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1029-1059, October.
    13. 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.
    14. CREMER, Helmuth & PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The economics of long-term care: a survey," LIDAM Discussion Papers CORE 2012030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    15. Mariacristina De Nardi & Eric French & John B. Jones, 2010. "Why Do the Elderly Save? The Role of Medical Expenses," Journal of Political Economy, University of Chicago Press, vol. 118(1), pages 39-75, February.
    16. Jeffrey R. Brown & Amy Finkelstein, 2008. "The Interaction of Public and Private Insurance: Medicaid and the Long-Term Care Insurance Market," American Economic Review, American Economic Association, vol. 98(3), pages 1083-1102, June.
    17. Daniel Barczyk & Matthias Kredler, 2018. "Evaluating Long-Term-Care Policy Options, Taking the Family Seriously," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 766-809.
    18. Rupa Chakrabarti, 1999. "Endogenous fertility and growth in a model with old age support," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(2), pages 393-416.
    19. Junsen Zhang & Junxi Zhang, 1998. "Social Security, Intergenerational Transfers, and Endogenous Growth," Canadian Journal of Economics, Canadian Economics Association, vol. 31(5), pages 1225-1241, November.
    20. Joan Costa-Font, 2010. "Family ties and the crowding out of long-term care insurance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(4), pages 691-712, Winter.
    21. 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.
    22. Pierre Pestieau & Motohiro Sato, 2008. "Long‐Term Care: the State, the Market and the Family," Economica, London School of Economics and Political Science, vol. 75(299), pages 435-454, August.
    23. Jeffrey Brown & Amy Finkelstein, 2011. "Insuring Long Term Care In the US," NBER Working Papers 17451, National Bureau of Economic Research, Inc.
    24. Luisa Fuster, 1999. "Effects of uncertain lifetime and annuity insurance on capital accumulation and growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 13(2), pages 429-445.
    25. Justina Klimaviciute & Sergio Perelman & Pierre Pestieau & Jerome Schoenmaeckers, 2017. "Caring for dependent parents: Altruism, exchange or family norm?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 30(3), pages 835-873, July.
    26. Kuhn, Michael & Nuscheler, Robert, 2011. "Optimal public provision of nursing homes and the role of information," Journal of Health Economics, Elsevier, vol. 30(4), pages 795-810, July.
    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. Justina Klimaviciute & Pierre Pestieau & Jérôme Schoenmaeckers, 2019. "Family altruism and long-term care insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 216-230, April.
    2. Giorgio Fabbri & Marie-Louise Leroux & Paolo Melindi-Ghidi & Willem Sas, 2024. "Conditioning public pensions on health: effects on capital accumulation and welfare," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-21, June.
    3. Philippe De Donder & Marie‐Louise Leroux, 2021. "Long term care insurance with state‐dependent preferences," Health Economics, John Wiley & Sons, Ltd., vol. 30(12), pages 3074-3086, December.
    4. Marie‐Louise Leroux & Gregory Ponthiere, 2020. "Nursing home choice, family bargaining, and optimal policy in a Hotelling economy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 899-932, August.
    5. Dimitrios Varvarigos, 2017. "Cultural norms, the persistence of tax evasion, and economic growth," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 63(4), pages 961-995, April.
    6. Justina Klimaviciute & Pierre Pestieau, 2023. "The economics of long‐term care. An overview," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1192-1213, September.
    7. Christophe Courbage & Guillem Montoliu‐Montes, 2020. "Estate recovery and long‐term care insurance," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(4), pages 949-972, August.
    8. Thibault, Emmanuel, 2016. "Demonstration effect and dynamic efficiency," Economics Letters, Elsevier, vol. 147(C), pages 42-45.
    9. repec:bla:annpce:v:89:y:2018:i:1:p:49-63 is not listed on IDEAS
    10. Thibault, Emmanuel & Ponthieres, Grégory, 2023. "Life Expectancy, Income and Long-Term Care: The Preston Curve Reexamined," TSE Working Papers 23-1474, Toulouse School of Economics (TSE).
    11. Masaya Yasuoka, 2019. "Elderly care service in an aging society," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 46(1), pages 18-34, January.
    12. Miyake, Atsushi & Shintani, Masaya & Yasuoka, Masaya, 2021. "Elderly Care and Informal Family Care," MPRA Paper 110126, University Library of Munich, Germany.
    13. Achim Kemmerling & Michael Neugart, 2019. "Redistributive pensions in the developing world," Review of Development Economics, Wiley Blackwell, vol. 23(2), pages 702-726, May.
    14. Yakita, Akira, 2020. "Economic development and long-term care provision by families, markets and the state," The Journal of the Economics of Ageing, Elsevier, vol. 15(C).
    15. Betti, Thierry & Lefebvre, Mathieu & Pestieau, Pierre, 2023. "Macroeconomics of aging," LIDAM Discussion Papers CORE 2023002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    16. Luca Marchiori & Olivier Pierrard, 2023. "Health subsidies, prevention and welfare," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 25(6), pages 1304-1336, December.

    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. Justina Klimaviciute & Pierre Pestieau, 2023. "The economics of long‐term care. An overview," Journal of Economic Surveys, Wiley Blackwell, vol. 37(4), pages 1192-1213, September.
    2. Justina Klimaviciute & Pierre Pestieau & Jérôme Schoenmaeckers, 2019. "Family altruism and long-term care insurance," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 216-230, April.
    3. Giorgio Fabbri & Marie-Louise Leroux & Paolo Melindi-Ghidi & Willem Sas, 2024. "Conditioning public pensions on health: effects on capital accumulation and welfare," Journal of Population Economics, Springer;European Society for Population Economics, vol. 37(2), pages 1-21, June.
    4. repec:bla:annpce:v:89:y:2018:i:1:p:49-63 is not listed on IDEAS
    5. CREMER, Helmuth & PESTIEAU, Pierre & PONTHIERE, Grégory, 2012. "The economics of long-term care: a survey," LIDAM Discussion Papers CORE 2012030, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    6. DE DONDER, Philippe & PESTIEAU, Pierre, 2011. "Private, social and self insurance for long-term care: A political economy analysis," LIDAM Discussion Papers CORE 2011053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Pestieau, Pierre & Ponthiere, Gregory, 2016. "The public economics of long term care," CEPR Discussion Papers 11365, C.E.P.R. Discussion Papers.
    8. Pestieau, Pierre & De Donder, Philippe, 2013. "Private, social and self-insurance for long-term care in the presence of family help: A political economy analysis," CEPR Discussion Papers 9587, C.E.P.R. Discussion Papers.
    9. Amitabh Chandra & Courtney Coile & Corina Mommaerts, 2023. "What Can Economics Say about Alzheimer's Disease?," Journal of Economic Literature, American Economic Association, vol. 61(2), pages 428-470, June.
    10. Achou, Bertrand, 2021. "Housing liquidity and long-term care insurance demand: A quantitative evaluation," Journal of Public Economics, Elsevier, vol. 194(C).
    11. Yakita, Akira, 2019. "Optimal long-term care policy in an intergenerational exchange setting," Research in Economics, Elsevier, vol. 73(4), pages 321-328.
    12. Betti, Thierry & Lefebvre, Mathieu & Pestieau, Pierre, 2023. "Macroeconomics of aging," LIDAM Discussion Papers CORE 2023002, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. John Laitner & Dan Silverman & Dmitriy Stolyarov, 2018. "The Role of Annuitized Wealth in Post-retirement Behavior," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(3), pages 71-117, July.
    14. 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).
    15. Jean-Marc Bascans & Christophe Courbage & Cornel Oros, 2017. "Means-tested public support and the interaction between long-term care insurance and informal care," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 113-133, June.
    16. Yakita, Akira, 2020. "Economic development and long-term care provision by families, markets and the state," The Journal of the Economics of Ageing, Elsevier, vol. 15(C).
    17. Jing Dong & Fabrice Smieliauskas & R. Tamara Konetzka, 2019. "Effects of long-term care insurance on financial well-being," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 44(2), pages 277-302, April.
    18. Sergi Jiménez‐Martín & José M. Labeaga‐Azcona & Cristina Vilaplana‐Prieto, 2016. "Interactions between Private Health and Long‐term Care Insurance and the Effects of the Crisis: Evidence for Spain," Health Economics, John Wiley & Sons, Ltd., vol. 25(S2), pages 159-179, November.
    19. Tatyana Koreshkova & Minjoon Lee, 2020. "Nursing Homes in Equilibrium: Implications for Long-term Care Policies," Working Papers wp414, University of Michigan, Michigan Retirement Research Center.
    20. Mariacristina De Nardi & Eric French & John Bailey Jones, 2016. "Savings After Retirement: A Survey," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 177-204, October.
    21. Christophe Courbage & Guillem Montoliu-Montes & Joël Wagner, 2020. "The effect of long-term care public benefits and insurance on informal care from outside the household: empirical evidence from Italy and Spain," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(8), pages 1131-1147, November.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

    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:ide:wpaper:28595. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/idtlsfr.html .

    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.