Household decisions over the life cycle

Thesis

This thesis features three chapters on distinct questions in the economics of ageing.

Chapter 1 examines the provision of informal care to elderly parents in the US. Using a dynamic model of sibling interaction, it shows that observed differences in opportunity costs explain little of the gender gap in caregiving, while there is an important role for strategic interaction in exacerbating the underlying gender care gap. These findings imply that policies aimed at closing the gender wage gap may not have significant effects on the gender care gap.

Chapter 2 analyses how households respond to mistakes in retirement planning. It exploits data on variation in beliefs about the State Pension Age in England and builds a a life-cycle model with rational inattention over pension policies. The results show that the welfare costs of inattention in this setting are heterogeneous but modest.

Chapter 3 studies the interaction between long-term care policy and the housing market. The focus is on the "homestead exemption" in means-tested support with long-term care costs, under which housing wealth is better protected from these costs. An overlapping-generations model of the housing market shows that this exemption distorts housing demand and raises house prices. A budget-balanced repeal of this policy brings significant welfare benefits.

Authors: Hunt, T

• DOI: 10.5287/ora-ozkqon65r
• Type of award: DPhil
• Level of award: Doctoral
• Awarding institution: University of Oxford
• Language: English
• Keywords: pensions; structural modelling; informal care; long-term care; ageing
• Subjects: Aging; Pensions; Caregivers; Long-term care