As part of the Actuarial Science research seminar Professor Peter Zweifel from the University of Zurich

on Monday,March 9 2026 at 2 pm

in the Helmholtzstrasse 18, room 220

on the topic "Multiple subsidisation of long-term care: the case of China". This paper was written with Xian Xu.

Abstract:

In China, the financing of long-term (LTC) services comes from three different sources: social insurance, the community of residence, and the central government. Two important objectives of public policy are to encourage the purchase of long-term care (LTC) insurance and to lower the demand for costly nursing home care. Both objectives may benefit from parents' altruism towards their children and children's altruism towards their parents (known as filial piety). Still, in the behavioural model presented here, intergenerational moral hazard is found to potentially undermine these objectives: The parent is predicted to reduce LTC insurance coverage in response to the child's caring effort, while the child lowers her effort in response to the parent's LTC insurance coverage. In addition, increases in the subsidies distinguished are found to foster care provided by the child but to potentially undermine the demand for LTC insurance coverage, creating scope for cost shifting between the subsidising authorities - as problem known in other countries as well.