The Rise in Old-Age Longevity and the Market for Long-Term Care

The evidence provides support for the predictions concerning the response in output growth to aging and the contraction of output due to the aging of males, and argues that the direct effect of aging is to lower the demand for market care by incresing the supply of home production.

Abstract

This paper analyzes how markets for old-age care respond to the aging of populations. We consider how the biological forces which govern the stocks of frail and healthy persons in a population interact with economic forces which govern the demand and supply for labor-intensive care.... We test our predictions empirically using state- and county-level evidence on the U.S. market for long-term care in nursing homes over the last three decades. (EXCERPT)