Review of Economics of the Household

, Volume 14, Issue 2, pp 463–488 | Cite as

Dynamic modelling of long-term care decisions

  • Michelle Sovinsky
  • Steven SternEmail author


This paper describes and analyzes research on the dynamics of long-term care and the policy relevance of identifying the sources of persistence in caregiving arrangements (including the effect of dynamics on parameter estimates, implications for family welfare, parent welfare, child welfare, and cost of government programs). We discuss sources and causes of observed persistence in caregiving arrangements including inertia/state dependence (confounded by unobserved heterogeneity) and costs of changing caregivers. We comment on causes of dynamics including learning/human capital accumulation; burnout; and game-playing. We suggest how to deal with endogenous geography; dynamics in discrete and continuous choices; and equilibrium issues (multiple equilibria, dynamic equilibria). We also present an overview of commonly used longitudinal data sets and evaluate their relative advantages/disadvantages. We also discuss other data issues related to noisy measures of wealth and family structure. Finally, we suggest some methods to handle econometric problems such as endogeneous geography.


Informal Care Unobserved Heterogeneity Care Arrangement Duration Dependence British Household Panel Survey 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


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Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.University of Zurich and CEPRZurichSwitzerland
  2. 2.University of VirginiaCharlottesvilleUSA

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