NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Income and the Utilization of Long-Term Care Services: Evidence from the Social Security Benefit Notch

Gopi Shah Goda, Ezra Golberstein, David C. Grabowski

NBER Working Paper No. 16076
Issued in June 2010
NBER Program(s):   AG   HC   HE   PE

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.

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This paper was revised on December 5, 2011

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Document Object Identifier (DOI): 10.3386/w16076

Published: Goda, Gopi Shah & Golberstein, Ezra & Grabowski, David C., 2011. "Income and the utilization of long-term care services: Evidence from the Social Security benefit notch," Journal of Health Economics, Elsevier, vol. 30(4), pages 719-729, July. citation courtesy of

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