Long-Term Care and the Housing Market

Citation

Bell D & Rutherford AC (2012) Long-Term Care and the Housing Market. Stirling Economics Discussion Paper, 2012-13.

Abstract
This paper examines the combined effects of population ageing and changes in long-term care policy on the housing market. Those needing care prefer to receive it at home rather than in institutional settings. Public authorities prefer to provide care in residential settings which are generally lower cost than institutional care. The trend away from institutional provision towards care at home is endorsed by national governments and by the OECD. Nevertheless, as the number requiring care increases, this policy shift will maintain the level of housing demand above what it would otherwise be. It will also have distributional consequences with individuals less likely to reduce their housing equity to pay for institutional care, which in turn will increase the value of their bequests. Empirical analysis using the UK Family Resources Survey and the British Household Panel Survey shows that household formation effects involving those requiring long-term care are relatively weak and unlikely to significantly offset the effects of this policy shift on the housing market and on the distribution of wealth.

Keywords
Long-term care; Housing market; Demographic change; Ageing

JEL codes

• J12: Marriage; Marital Dissolution; Family Structure; Domestic Abuse
• J14: Economics of the Elderly; Economics of the Handicapped; Non-labor Market Discrimination
• C21: Single Equation Models; Single Variables: Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions
• C73: Stochastic and Dynamic Games; Evolutionary Games; Repeated Games

• SEDP-2012-13-Bell-Rutherford.pdf