Social and Behavioral Sciences Commons^™

Formal And Informal Care: An Empirical Bayesian Analysis Using The Two-Part Model, Juan Du

Economics Faculty Publications

Informal care provided to the elderly by their children is proposed as a less expensive alternative to institutional long-term care. This paper explores how the elderly's consumption of medical care changes in response to changes in the informal care they receive from their children. Many earlier studies have ignored both the endogeneity of informal care and the complicated nature of health care utilization data. This paper develops a two-part model with informal care treated as an endogenous regressor and imposes exclusion restrictions on the selection process. The model is fitted using the Bayesian Markov Chain Monte Carlo (MCMC) methods, in …