The use of long-term care services by the Dutch elderly

The main focus of this paper is the development of an appropriate framework to characterize the process of long-term care utilization by the Dutch elderly. Three broad categories of care services are considered, namely, informal care, formal care at home, and institutional care. The use of these care alternatives is modelled jointly, and stochastic dependence is allowed between the various care options. Special attention is given to the concept of health status and to the potential endogeneity of this variable in the model. We apply a flexible non-parametric method to summarize the multidimensional concept of health status into a limited set of interpretable indices. The model is applied on the Longitudinal Ageing Study Amsterdam (LASA). We find strong effects of health status, gender, socio-economic variables, and prices on the utilization of long-term care services.