Causes of Caregiver Turnover and the Potential Effectiveness of Wage Subsidies for Solving the Long-Term Care Workforce 'Crisis'

Detailed data on private providers of long-term community-based residential services for persons with developmental disabilities permit investigation of the causes of frontline worker turnover. The endogeneity of turnover with compensation variables is accounted for in the estimation using instrumental variables. Turnover is determined by resident characteristics, frontline-worker compensation, and establishment characteristics. The share of higher-need residents and agency size predict higher turnover, while compensation and non-profit status are associated with lower turnover. Our findings indicate that public policies to reduce turnover through compensation subsidization can be effective. Our preferred estimates suggest an approximate one-quarter increase in total compensation would cut turnover by one-third.