Immigration allows more U.S. elderly to age outside institutions by lowering the cost of home-based care, find Kristin F. Butcher of Wellesley, Kelsey Moran of MIT, and Tara Watson of Williams College. The authors show that a 10-percentage point increase in the less educated, foreign-born share of the local labor force lowers the probability of institutionalization of individuals over 65 and 80 by 26% and 29%, respectively. Had immigration remained at 1980 levels, their estimates imply, the average over-65 American in 2000 would have been 10% more likely to live in an institution. Immigration makes labor-intensive home care both more affordable and more available, the authors say: higher immigration rates lower wages for less-educated workers and increase employment of health and nursing aides, as well as other home-support workers like housekeepers and gardeners. In contrast, wages for highly trained workers like registered nurses — more likely to work in institutional settings — increase, and their hours worked fall.
The U.S. population is aging. We examine whether immigration causally affects the likelihood that the U.S.-born elderly live in institutional settings. Using a shift-share instrument to identify exogenous variation in immigration, we find that a 10 percentage point increase in the less- educated foreign-born labor force share in a local area reduces institutionalization among the elderly by 1.5 and 3.8 percentage points for those aged 65+ and 80+, a 26-29 percent effect relative to the mean. The estimates imply that a typical U.S-born individual over age 65 in the year 2000 was 0.5 percentage points (10 percent) less likely to be living in an institution than would have been the case if immigration had remained at 1980 levels. We show that immigration affects the availability and cost of home services, including those provided by home health aides, gardeners and housekeepers, and other less-educated workers, reducing the cost of aging in the community.
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