Care of the Elderly: Division of Labor Among the Family, Market and State

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Citation: Soldo, Freedman (1994) Care of the Elderly: Division of Labor Among the Family, Market and State.

Tagged: uw-madison (RSS), wisconsin (RSS), sociology (RSS), demography (RSS), prelim (RSS), qual (RSS), WisconsinDemographyPrelimAugust2009 (RSS), economics (RSS)


As a greater proportion of the US population becomes elderly, the prevalence of disability is expected to increase dramatically. With the rise in disability, nonmedical personal care will also need to grow to keep up with the demand for assistance with chronic limitations in basic self-care activities, such as shopping, bathing, dressing, meal preparation and so on. Because nonmedical personal care is nontechnical, no single institution can claim to be singularly competent in the provision of services. This chapter examines three personal sources of personal care in the US: the family, the marketplace and the state. More specifically, the chapter considers how one source of care (e.g., the marketplace) might substitute for another form of care (e.g., the family) as demands for service increase.

Substitution of Paid Providers for Family Care: "For the most part, the gerontological literature has concerned itself with the substitution of market (or "formal") services for family (or "informal") care. . . Research on the substitution of formal care for informal care has been motivated by two related concerns. First, demographic trends portend a reduction in the supply of informal helpers, particularly the adult daughters of widowed or older persons, as the family size of the elderly declines in the next century. Second . . . is apprehension . . . if state subsidized home care benefits were to encourage family helpers to withdraw or reduce their efforts in response to a decline in the price of purchased care" (p. 200). At present, the bulk of personal care is provided by family members-which is what the majority of elderly prefer. But one in four elderly rely at least in part on paid helpers, and this proportion is expected to rise considerably.

Substitution of Financial for Time Transfers: This type of substitution is how the state currently responds to the care of frail elderly. That is, the state typically substitutes its own "time" (i.e., state employees) with Medicare and Medicaid payments made to private organizations which provide the service. But, due to insufficient data, "considerably less is known about the extent to which the family commonly substitutes financial transfers for its collective time. . . Nonetheless, existing data suggest that about one-fifth of the elderly may receive either regular or episodic financial transfers from adult children" (p. 207). Economic models which posit motivations for such substitutions (e.g., selfish exchange model in which the adult child may substitute money for time in order to limit close contact by maintaining separate residences), have received mixed empirical support. But, standard economic theory yields the basic insight that the higher the value of the child's time, the more likely she or he is to make a financial rather than a time transfer. As a time pressured society, this may have implications for future trends in this type of transfer.

Discussion: At the time of this study, data limitations precluded sophisticated analyses of substitutions. But, Solo and Freedman anticipated that Michigan's Health and Retirement Survey (HRS) and Asset and Health Dynamics (AHEAD) would help fill some research gaps.