The Effect of Long-Term Care Insurance on Labor Supply

노인장기요양보험제도의 노동공급효과 분석 - 부양가구원과 여성가구원을 중심으로-

  • Received : 2015.10.03
  • Accepted : 2015.11.16
  • Published : 2015.11.30


This study examines the impact of Long-Term Care Insurance(LTCI) on family caregivers(especially focused on female household members) labor supply in South Korea. When public care and informal care are substitutes, LTCI will change allocation of time of family caregivers to spend more time to paid work. The impact of LTCI on labor supply depends on each country's institutional level of public care services. If public care can not substitute for informal care, labor supply of family caregivers will not rise significantly. The conclusions of vigorous empirical study from western countries' are incompatible and problem of endogeneity in terms of methodology has been raised consistently. The dataset of this study are used the third and ninth waves of Korea Welfare Panel. As a result, the introduction of LTCI had no effect on labor supply of household members. Robust findings suggest the positive effects of caregiving on labor market outcomes in simple comparison t-test, but not in fixed-effect regression. Compared with western countries, South Korea's public care services can be interpreted as a supplement to only part that remained at the level does not substitute informal care. These findings may suggest that if LTCI become much more prevalent in the future, senior citizens and family members will be able to choose the LTCI arrangement that best suits their needs.