Income and the utilization of long-term care services: Evidence from the Social Security benefit notch

Gopi Shah Goda, Ezra Golberstein, David C. Grabowski

Research output: Contribution to journalArticlepeer-review

26 Scopus citations

Abstract

This paper estimates the impact of income on the long-term care utilization of elderly Americans using a natural experiment that led otherwise similar retirees to receive significantly different Social Security payments based on their year of birth. Using data from the 1993 and 1995 waves of the AHEAD, we estimate instrumental variables models and find that a positive permanent income shock lowers nursing home use but increases the utilization of paid home care services. We find some suggestive evidence that the effects are due to substitution of home care for nursing home utilization. The magnitude of these estimates suggests that moderate reductions in post-retirement income would significantly alter long-term utilization patterns among elderly individuals.

Original languageEnglish (US)
Pages (from-to)719-729
Number of pages11
JournalJournal of Health Economics
Volume30
Issue number4
DOIs
StatePublished - Jul 1 2011

Keywords

  • Income elasticity
  • Long-term care
  • Social Security notch

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