Will You Still Want Me Tomorrow? The Dynamics of Families’ Long-Term Care Arrangements

Abstract

With data from the Assets and Health Dynamics Among the Oldest Old Survey, we estimate dynamic models of three dimensions of families’ elder-care arrangements: the use of each potential care arrangement, namely care provided by a spouse, care provided by an adult child, formal home health care, and/or institutional care; the selection of the primary care arrangement; and hours in each care arrangement. Our results indicate that both observed heterogeneity and positive true state dependence contribute to the persistence of care arrangements. Evidence of positive true state dependence for most or all modes of care in all models suggests that inertia generally dominates caregiver burnout. Our results indicate that formal care decisions depend on the cost and quality of care. As a result of inertia, the effectiveness of long-term care policy depends on timing: initial caregiving decisions are more sensitive than subsequent decisions to economic incentives.