Public Long-Term Care Insurance and Retirement Intentions of Urban Workers: Evidence From China

Abstract

While many studies examine the effects of long-term care insurance (LTCI) on labor supply and retirement behaviors, its effect on retirement intentions—offering certain advantages over actual behaviors—remains unclear. This study applies a difference-in-differences design to estimate the effect of China's public LTCI pilots on urban workers' retirement intentions, based on the China Health and Retirement Longitudinal Study. The results indicate that LTCI significantly increases workers' probability of intending to delay retirement and their intended retirement age, especially for LTCI providing both service and cash benefits. Moreover, the effects are larger among female, self-employed workers, and workers whose family members with LTCI eligibility, as these subgroups are more likely to be caregivers and caregivers' effect is larger. Mechanism analysis reveals that LTCI reduces time support within the family and improves mental health, both of which contribute to delayed retirement intentions. A negative effect through the mitigation of precautionary saving motives by LTCI also exists, but it is subtler.