Abstract

We examine how long-term care insurance (LTCI) affects family outcomes expected to be sensitive to LTCI, including utilization of informal care and spillover effects on children.

An instrumental variables approach allows us to address the endogeneity of LTCI coverage. LTCI coverage induces less informal caregiving, suggesting the presence of intra-family moral hazard. We also find that children are less likely to co-reside or live nearby parents with LTCI and more likely to work full-time, suggesting that significant economic gains from private LTCI could accrue to the younger generation.

Slides