Dostie, Benoit, and Pierre Thomas Léger. 2005. “The Living Arrangement Dynamics of Sick, Elderly Individuals.” Journal of Human Resources 40(4): 989-1014.

We model the dynamics associated with living-arrangement decisions of sick elderly individuals. Using the Panel Study of Income Dynamics’ Parental Health Supplement, we construct the complete living-arrangement histories of elderly individuals in need of care. We use a simultaneous random-effects competing-risks model to analyze the impact of demographic characteristics, health, and wealth on the living-arrangement decisions of sick elderly individuals while taking into account state and duration dependence as well as unobserved heterogeneity. We find that the sick elderly individual’s current living arrangement as well as the time spent in that living arrangement serve as important predictors of future living-arrangements.

Both authors are assistant professors in the Institute of Applied Economics, HEC Montréal and CIRANO and CIRPÉE. The authors are grateful to seminar participants at McGill, Laval, HEC Montréal, IRDES (Paris), SCSE (Montréal), CEA (Ottawa), 4e Journée d’économie publique LAGV (IDEP-Marseilles), CHESG (Banff), the HERO session at the ASSA meetings (San Diego), to Rob Clark and especially to two anonymous referees for their valuable comments. Both authors acknowledge funding from HEC Montréal. The data used in this article can be obtained beginning May 2006 through April 2009 from Pierre Thomas Léger, Institute of Applied Economics, HEC Montréal, 3000, chemin de la Côte-Sainte-Catherine, Montréal, Québec, Canada H3T 2A7; e-mail: ptl@hec.ca.