Abstract ：
We examine the optimality of public long-term care policy, incorporating a Nash game between elderly parents and adult children and transfer-seeking competition among siblings, instead of children’s altruism. Results show that when children compete to obtain more bequests from parents in exchange for attention and care, public long-term care policy is socially optimal if long-term care taxation sufficiently benefits parents through the long-term care provision, thereby reducing parental bequests to children, possibly to zero. If taxation insufficiently benefits parents, then formal long-term care policy might not be necessary because parents receive adequate informal care in exchange for bequests to children.

Keywords : bequests, exchange model of intergenerational transfers, long-term care insurance, transfer-seeking children

JEL code: D15, H20, H50