The political economy of (in)formal long term care transfers*

Why are long-term care (LTC) social transfers so small in most countries? First, informal help may be politically preferred to LTC social transfers when dependent parents have a strong preference for such a form of assistance. Second, when the parents’ probability of becoming dependent is low, the children of autonomous parents may be numerous enough to democratically oppose the introduction of LTC social transfers. Third, a political majority may dislike small LTC social transfers and prefer much larger transfers (though these may completely crowd out family help). In such a context, an incremental introduction of LTC social transfers may be politically unfeasible: LTC transfers would need to be introduced at a large scale to receive sufficient political support, something that is rarely observed in the real world.