Chicago Fed: Economic Implications of Elder Care

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In the current edition of Chicago Fed Insights, economists at the Chicago Fed take a deep dive into the demographics of population aging in the US and the economic and fiscal implications of elder care. In the first part of this three-part series, the authors look at the three types of living arrangements for older adults, community based, assisted living, and nursing home, and point out that the utilization of each varies with age and demographic group. In addition to the direct effects of aging on the labor force and on public services, the article points out the second order effect of caregiving, noting that as more of the elderly age in community settings, caregiving often falls on family members which “can reduce labor force attachment, lower work hours, limit job mobility, and depress lifetime earnings”. One of the more interesting statistics discussed in the piece is the elderly dependency ratio, or the number of people over 65 divided by the number 15-64. The authors note that “higher elder dependency ratios imply fewer potential workers available to support the needs of a growing older population, placing pressure on labor markets, caregivers, and public budgets”. The below exhibit is reproduced from the Chicago Fed Insights article. 


Source: Federal Reserve Bank of Chicago

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