This article uses cross-sectional data from the Survey of Health, Ageing, and Retirement in Europe (SHARE) database to test the effect of both long-term care (LTC) public benefits and insurance on the receipt of informal care provided by family members living outside the household in Italy and Spain. The choice of Italy and Spain comes from the fact that informal care is rather similar in these two countries while their respective public LTC financing systems are different. Our results support the hypothesis of LTC public support decreasing the receipt of informal care for Spain while reject it for Italy. They tend to confirm that the effect of public benefits on informal care depends on the typology of public coverage for LTC whereby access to proportional benefits negatively influences informal care receipt while access to cash benefits exerts a positive effect. Our results also suggest that private LTC insurance complements the public LTC financing system in place.
This paper empirically assesses how financial risk aversion reacts to a change in individuals' wealth and health and to the introduction of both financial and health risks using the Survey of Health, Ageing, and Retirement in Europe (SHARE). Individuals in our sample exhibit financial risk aversion decreasing both in wealth and health. Financial risk aversion is also found to increase in the presence of both background financial and health risks. Interestingly, the sensitivity of financial risk aversion to wealth, respectively to health, is shown to depend on the presence of a financial background risk, respectively health background risk, but in opposite directions. Such findings can help to better understand various economic decisions in a risky environment.
Estate recovery is a policy under which the State recovers part of LTC subsidies from the estates of deceased beneficiaries. This paper studies the effect of estate recovery on long-term care (LTC) insurance demand. This effect strongly relies on the bequest motive since the main purpose behind purchasing LTC insurance is to protect bequests from the financial costs of LTC. We find that the impact of estate recovery on LTC insurance depends on the level of parental bequests and on whether and how the parent anticipates the child's preferences with respect to informal care. More specifically, we show that estate recovery encourages the parent to purchase LTC insurance when his child is considered selfish or to like providing care. However, this policy could provide disincentives to LTC insurance purchase by the parent if his child is considered to dislike providing informal care. Our results also show that estate recovery reduces and may even eliminate public support crowding out of private LTC insurance demand. Finally, we characterise the welfare implications of financing LTC public support by estate recovery.
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