Date of Award

Fall 2016

Project Type

Dissertation

Program or Major

Economics

Degree Name

Doctor of Philosophy

First Advisor

Reagan Baughman

Second Advisor

Andrew Houtenville

Third Advisor

Ju-Chin Huang

Abstract

This research examines three factors – macroeconomic conditions, the Deficit Reduction Act of 2005, and inter-vivos transfers – that influence both the availability of long-term care services and the use of these services. The first essay explores how changes in the macroeconomy, specifically the 2007-2009 “Great Recession,” affect the utilization of paid and unpaid long-term care services. It is theoretically unclear how long-term care use should be affected by such downturns, as an individual’s health status, wealth, insurance coverage and access to care are all likely to change during a significant downturn such as the “Great Recession.” Using data from the 1998-2012 waves of the Health and Retirement Study, a survey that follows Americans over the age of 50 as they begin to transition into retirement, we estimate the effects of changes in the unemployment rate at both the national and county levels on long-term care use. We find consistent evidence that overall care use declines significantly during downturns, with additional results suggesting that these results may be driven by reductions in individual wealth and improvements in individual health status.

The second essay examines how the implementation of the Deficit Reduction Act of 2005, a policy that imposed stricter regulations about how individuals could “spend down” their assets to become Medicaid eligible, impacts both asset transfers and long-term care use among the elderly. Using data from the 1998-2010 waves of the Health and Retirement Study, I estimate the effects of this policy using a difference-in-difference framework. Overall, individuals seem to substitute from making inter-vivos transfers to holding assets in trusts in response to the enactment of the Deficit Reduction Act. With regard to care use, individuals seem to substitute from in-home long-term care to more visits to both doctors and adult day care facilities following the DRA, an effect primarily driven by the wealthiest and youngest individuals.

The third essay investigates the relationship between parent-to-child inter-vivos asset transfers and future informal care provision by that child. Using data from the 1998 – 2010 waves of the Health and Retirement Study, I am able to use the timing of the transfers and the care use to describe this relationship. The results suggest that the receipt of an inter-vivos transfer during the previous two years is strongly positively correlated with that child’s likelihood of providing care during the previous month. In addition, I confirm a previous finding in the literature that child’s gender, relationship to the parent and geographical proximity to the parent all significantly influence the child’s decision to provide care.

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