A microeconomic analysis of the impact of estate recovery for long-term care Articles uri icon

publication date

  • January 2012


  • 2


  • 63

International Standard Serial Number (ISSN)

  • 0035-2764

Electronic International Standard Serial Number (EISSN)

  • 1950-6694


  • This paper examines the possible reform of the system of aid to dependent individuals (ARA), a reform aimed at recovering the subsidies awarded from the individual's bequest. We develop a theoretical model with a dependent parent and an offspring that can potentially act as informal carer. The parent decides how much formal aid to buy, while the offspring decides how much informal care to provide to her parent. The model is solved for three cases: no altruism, altruism from bequests (towards a surviving spouse or offspring), and altruism towards the parent. We show that recovering the subsidy from the bequest increases the amount of informal aid supplied by a non-altruist offspring, while the versions with altruism yield ambiguous results. (copyright) Presses de Sciences Po. Tous droits r¿erv¿ pour tous pays.