Economic Theory

, Volume 61, Issue 4, pp 755–785

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

Research Article

DOI: 10.1007/s00199-016-0957-4

Cite this article as:
Canta, C., Pestieau, P. & Thibault, E. Econ Theory (2016) 61: 755. doi:10.1007/s00199-016-0957-4

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 and welfare 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 those of a standard Diamond (Am Econ Rev 55:1126–1150, 1965) model with dependence. For instance, if the family help is sizeably more productive than other LTC financing sources, pay-as-you-go social insurance might be a complement to private insurance and foster capital accumulation.

Keywords

Long-term care Capital accumulation Family norms  Public insurance 

JEL Classification

D13 E22 H55 I13 

Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  • Chiara Canta
    • 1
  • Pierre Pestieau
    • 2
  • Emmanuel Thibault
    • 3
  1. 1.Norwegian School of EconomicsBergenNorway
  2. 2.CORE, TSE and University of LiegeLiegeBelgium
  3. 3.Toulouse School of Economics (IDEI and University of Perpignan)ToulouseFrance

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