Housing liquidity and long-term care insurance demand: A quantitative evaluation

• 成果类型: Article
• 署名作者: Achou, Bertrand
• 署名单位: Universite de Montreal; HEC Montreal; Laval University; Laval University
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2020.104353
• 发表日期: 2021
• 关键词: Long-term care; insurance; life-cycle; housing; liquidity; retirement

摘要

In theory, illiquid housing may substitute for long-term care insurance (LTCI) as retirees decumulate housing wealth mainly when moving to long-term care facilities. In this paper, I build and estimate a rich life-cycle model of single retirees in order to evaluate whether the impact of housing liquidity on LTCI demand is large. Overall, I find that the prospects of increasing LTCI demand by making housing more liquid are quite limited, as even large increases in housing liquidity generate modest increases in LTCI demand. I also find a limited impact of housing liquidity on the demand for life annuities. Finally, I show that the types of bequest motives used to rationalize the low take-up of reverse mortgages are generally inconsistent with the low demand for LTCI, suggesting that other factors may play a role in this low take-up of reverse mortgages. (C) 2020 Elsevier B.V. All rights reserved.