Abstract
A feeling of a shortage of long-term care (LTC) workers has been surging among Japan's long term care insurance institutions since 2003. In 2006, 62.9% of the institutions reported feeling this shortage, up from 15.3% in 2003.
This paper attempts to test four reasons in regard with the shortage of LTC workers: the increasing labor demand of other industries, the 4% cut of care reward in October 2005, a near-monopoly buyer's labor market, and a mechanism of letting underperformed institutions remain in the market.
By using repeated cross-sectional data of national-wide institution surveys in 2004, 2006, and 2007, I find that the first two reasons (increasing labor demand of other industries and the cut of care reward) are very strong factors in explaining the shortage of LTC workers. The fourth reason (underperformed institutions remained) is insignificant and the effect of the third reason is indeterminate. That is, although the magnitude of the Herfindahl Index indicates that Japan's LTC workers' labor market is far from a monopoly, LTC workers in less competitive areas are earning less and the institutions there could face a more serious shortage of LTC workers than their counterparts.
