RIEB Discussion Paper Series No.2024-24

Title

The Nexus between Long-term Care Insurance, Formal Care, Informal Care, and Bequests: The Case of Japan

Abstract

The purpose of this paper is to conduct a theoretical and empirical analysis of the nexus between long-term care insurance (LTCI), formal care, informal (family) care, and bequests. In our empirical analysis, we use micro data from the Japan Household Panel Survey on Consumer Preferences and Satisfaction (JHPS-CPS), formerly known as the Preference Parameter Study, conducted by Osaka University. Japan is an interesting case to analyze because a public LTCI system was introduced there in 2000. Our analysis shows that, in the case of Japan, if parents are eligible for public LTCI benefits, their children will be less likely to be their primary caregiver and that this, in turn, will reduce their children's perceived likelihood of receiving a bequest from them. This result implies that bequests are selfishly or strategically motivated (i.e., that parents leave bequests to their children in order to elicit care from them) and that the introduction of a public LTCI system will reduce the likelihood of children providing care to their parents and through this channel reduce their perceived likelihood of receiving a bequest from them.

Keywords

Altruistic bequests; Bequests; Caregiving; Elderly care; Family care; Formal care; Informal care; Long-term care; Long-term care insurance; Parental care; Selfish bequests; Strategic bequests

JEL Classification

D11, D12, D15, D64, E21, I13, J14

Inquiries

Charles Yuji HORIOKA
Research Institute for Economics and Business Administration
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059
Institute of Social and Economic Research, Osaka University
Asian Growth Research Institute
National Bureau of Economic Research

Emin GAHRAMANOV
School of Business Administration, Department of Economics, American University of Sharjah

Xueli TANG
Faculty of Business and Law, Deakin University