What question did this study set out to answer?

This research aims to estimate the impact of parent and child characteristics on care arrangements while addressing endogeneity issues.

January 1, 1995

Estimating Family Long-Term Care Decisions in the Presence of Endogenous Child Characteristics

Key Points

This research aims to estimate the impact of parent and child characteristics on care arrangements while addressing endogeneity issues.
Utilized an instrumental variables approach to control for endogeneity
Employed panel data to analyze changes over time
Conditioned on the parent receiving no significant care in the first year for valid instruments
After controlling for endogeneity, child variables have smaller effects on care decisions
Moderate effects predicted from parent characteristics such as sex, age, race, and health
Large effects identified from parent marital status and child distance in decision-making

Abstract

This paper estimates the effects of various parent and child characteristics on the choice of care arrangement of the parent taking into account the potential endogeneity of some of the child characteristics. This potential endogeneity is controlled for by using an instrumental variables approach with panel data. The procedure conditions on the parent receiving no significant care in the first year of the panel causing first year variables to be valid instruments for the second year variables. The estimation procedure shows that, after controlling for endogeneity, potentially endogenous child variables have smaller effects. The estimates predict moderate effects of parent sex, age, race, and health and child sex and marital status, and large effects of parent marital status and child distance.

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