The ability to pay for long-term care in the Netherlands: A life-cycle perspective

Arjen Hussem*, Casper van Ewijk, Harry ter Rele, Albert Wong

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

This paper uses synthetic life-cycle paths at the individual level to analyze the distribution of long-term care expenditures in the Netherlands. Using a comprehensive set of administrative data 20,000 synthetic life-cycle paths of household income and long-term care costs are constructed using the nearest neighbor resampling method. We show that the distribution of these costs is less skewed when measured over the life-cycle than on a cross-sectional basis. This may provide an argument for self-insurance by smoothing these costs over the life-cycle. Yet costs are concentrated at older ages, which limits the scope for self-insurance. Furthermore, the paper investigates the relation between long-term care expenditures, household composition, and income over the life-cycle. The expenditures on a lifetime basis from the age of 65 are higher for low income households, and (single) women.

Original languageEnglish
Pages (from-to)209-234
JournalDe Economist
Volume164
Issue number2
DOIs
Publication statusPublished - Jun 2016

Keywords

  • Life-cycle
  • Long-term care costs
  • Nearest neighbor resampling method
  • Self-insurance

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