Bridget Hiedemann, Michelle Sovinsky, Steven Stern

We estimate dynamic models of elder-care arrangements using data from the Assets and Health Dynamics Among the Oldest Old Survey. We model the use of institutional care, formal home health care, care provided by a child, and care provided by a spouse in the selection of each care arrangement, the primary arrangement, and hours in each arrangement. Our results indicate that both observed heterogeneity and true state dependence play roles in the persistence of care arrangements. We find that positive state dependence (i.e., inertia) dominates caregiver burnout, and that formal care decisions depend on the cost and quality of care.

JEL Codes
C51: Model Construction and Estimation
C61: Optimization Techniques; Programming Models; Dynamic Analysis
J14: Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
dynamic models
long-term care
home health care
informal care