Volume 30, Number 3 (Summer) 1995
Stern, Steven. 1995. "Estimating Family Long-Term Care Decisions in the Presence of Endogenous Child Characteristics." Journal of Human Resources 30(3):551-580.
This paper estimates the effects of various parent and child characteristics on the choice of care arrangement of the parent taking into account the potential endogeneity of some of the child characteristics. This potential endogeneity is controlled for by using an instrumental variables approach with panel data. The procedure conditions on the parent receiving no significant care in the first year of the panel causing first year variables to be valid instruments for the second year variables. The estimation procedure shows that, after controlling for endogeneity, potentially endogenous child variables have smaller effects. The estimates predict moderate effects of parent sex, age, race, and health and child sex and marital status, and large effects of parent marital status and child distance.
The author is a professor of economics at the University of Virginia. He wishes to thank Mike Palumbo, Jon Skinner, Jim Hamilton, Toni Braun, Frank Wolak, Douglas Wolf, Jim Berkovec, William Johnson, Derek Neal, Tom Mroz, and three anonymous referees for helpful comments, Amy Crews, Anne Gulati, and Mikel Ham for excellent research assistance, and Peggy Pasternak for excellent typing. He takes responsibility for all remaining errors. Financial support was received from the University of Virginia Bankard Fund. The data used in this article can be obtained beginning December 1995 through December 1998 from the author: Department of Economics, University of Virginia, Charlottesville, Virginia 22903.
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