The effect of house prices on the long-term care market: Evidence from England

Bilotkach, Volodymyr and Braakmann, Nils and Gonzalo-Almorox, Eduardo and Wildman, John (2017): The effect of house prices on the long-term care market: Evidence from England.

Abstract

High house prices are often considered to be beneficial for the elderly due to the accumulation of wealth. However, as land is an input in the provision of public services, the elderly might be harmed by them, for example, due to a shortage of local care homes. Alternatively, care home providers might be attracted by asset-rich potential clients, which could lead to a positive effect of house prices on the provision of care. Applying an instrumental variables approach on English data, we show that higher house prices lead to fewer care homes, fewer entries into the market as well as fewer available beds.

• Item Type: MPRA Paper
• Language: English
• Keywords: Care homes, house prices, long-term care, England
• Subjects: I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

References

AGEUK 2017. Briefing: Health and Care of Older People in England 2017. AgeUK.

AUDRETSCH, D. B. & FRITSCH, M. 1994. On the measurement of entry rates. Empirica, 21, 105-113.

BARRON, D. N. & WEST, E. 2017. The quasi-market for adult residential care in the UK: Do for-profit, not-for-profit or public sector residential care and nursing homes provide better quality care? Social Science and Medicine, 179, 137-146.

BERTRAND, M. & KRAMARZ, F. 2002. Does entry regulation hinder job creation? Evidence from the French retail industry. The Quarterly Journal of Economics, 117, 1369-1413.

CAMPBELL, R. 2015. Investment in care homes. British Property Federation.

CARE QUALITY COMMISSION. 2016. The state of health care and adult social care in England 2015/16. Care Quality Commission.

CHESHIRE, P. 2009. Urban land markets and policy failures.

CHESHIRE, P. C., HILBER, C. A. L. & KAPLANIS, I. 2014. Land use regulation and productivity - land matters: evidence from a UK supermarket chain. Journal of Economic Geography, 43-73.

CHESHIRE, P., HILBER, C.A. & KOSTER, H.R., 2015. Regulating housing vacancies away? The paradoxical effects of mismatch.

DARTON, R., FORDER, J., NETTEN, A., BEBBINGTON, A., HOLDER, J. & TOWERS, A.-M. 2010. Slicing up the pie: allocation of central government funding of care of older people. Social Policy and Administration, 44, 529-553.

FICHERA, E. & GATHERGOOD, J., 2016. Do wealth shocks affect health? New evidence from the housing boom. Health economics, 25(S2), pp.57-69.

FORDER, J. & ALLAN, S. 2014. The impact of competition on quality and prices in the English care homes market. Journal of Health Economics, 34, 73-83.

GRABOWSKI, D. C. 2004. A longitudinal study of Medicaid payment, private-pay price and nursing home quality. International journal of health care finance and economics, 4, 5-26.

GRIFFITH, R. & HARMGART, H. 2008. Supermarkets and planning regulation. CEPR Discussion Paper, 6713.

HANCOCK, R. & HVIID, M. 2010. Buyer power and price discrimination: the case of the UK care homes market. ISER Working Paper Series.

HASKEL, J. & SADUN, R. 2012. Regulation and UK retailing productivity: evidence from microdata. Economica, 79, 425-448.

HENRETTY, N. 2017. Housing affordability in England and Wales: 1997 to 2016. Office of National Statistics.

HILBER, C. A. L. 2015. UK Housing and Planning Policies: the evidence from economic research. Centre of Economic Performance election analysis series.

HILBER, C. A. L. 2017. Britain's Housing Crisis: causes and cures. Presentation at the Department of Geography and Environment. London School of Economics.

HILBER, C. A. L. & ROBERT-NICOUD, F. E. D. E. R. 2013. On the origins of land use regulations: Theory and evidence from US metro areas. Journal of Urban Economics, 75, 29-43.

HILBER, C. A. L. & SCHONI, O. 2016. Housing Policies in Switzerland, the United Kingdom, and the United States.

HILBER, C. A. L. & VERMEULEN, W. 2016. The Impact of Supply Constraints on House Prices in England. The Economic Journal, 126, 358-405.

HILLER, N. & LERBS, O. W. 2016. Aging and urban house prices. Regional Science and Urban Economics, 60, 276-291.

HUMPHRIES, R., THORLBY, R., HOLDER, H., HALL, P. & CHARLES, A. 2016. Social care for older people: home truths. London, The King's Fund.

JARRET, T. 2017. The care home market. The House of Commons Library.

KASCHOWITZ, J. & BRANDT, M. 2017. Health effects of informal caregiving across Europe: A longitudinal approach. Social Science and Medicine, 173, 72-80.

KING, N. 2011. Planning Use Classes and Extra Care Housing. Housing Learning & Improvement Network.

LE GRAND, J. 1991. Quasi-markets and social policy. The Economic Journal, 101, 1256-1267.

MACHIN, S., MANNING, A. & RAHMAN, L. 2002. Where the minimum wage bites hard: the introduction of the UK national minimum wage to a low wage sector, Centre for Economic Performance, London School of Economics and Political Science.

McMILLEN, D. P., & POWERS, E. T. 2017. The eldercare landscape: Evidence from California. Health Economics,26 (S2), 139-157.

MUKAMEL, D. B. & SPECTOR, W. D. 2002. The competitive nature of the nursing home industry: price mark ups and demand elasticities. Applied Economics, 34, 413-420.

NETTEN, A., DARTON, R. & WILLIAMS, J. 2003. Nursing home closures: effects on capacity and reasons for closure. Age and Ageing, 32, 332-337.

NETTEN, A., WILLIAMS, J. & DARTON, R. 2005. Care-home closures in England: causes and implications. Ageing and Society, 25, 319-338.

OFT 2005. Care homes for Older People in the UK: A market study. Office of Fair Trading.

SADUN, R. 2015. Does planning regulation protect independent retailers? Review of Economics and Statistics, 97, 983-1001.

SANCHEZ VIDAL, M. 2016. Retail shocks and city structure. IEB Working Paper Series, 2016/12.

SCHIVARDI, F. & VIVIANO, E. 2011. Entry barriers in retail trade. Economic Journal, 121, 145-170.

SMITH, N. A., PHILLIPS D., SIMPSON, P., EISER, D. & TRICKEY, M. 2016. A time of revolution: British local government finance in the 2010s The Institute for Fiscal Studies.

STAIGER, D. & STOCK, J., 1997. Instrumental Variables Regression with Weak Instruments.Econometrica,65(3), pp.557-586.

STEVENSON, D.G. & GRABOWSKI, D.C., 2010. Sizing up the market for assisted living.Health Affairs,29(1), pp.35-43.

TOKUNAGA, M. & HASHIMOTO, H. 2013. Factors affecting the entry of for-profit providers into a price regulated market for formal long-term care services: A case study from Japan. Social Science and Medicine, 76, 143-149.

VAN GROENOU, M. I. B. & DE BOER, A. 2016. Providing informal care in a changing society. European Journal of Ageing, 13, 271-279.