2017 Volume 29 Issue 1 Pages 33-57
Reflecting the increasing demand for long-term care (LTC) services as Japan's population continues to age, ensuring a stable supply of caregivers has been an important policy issue in recent years. Preceding studies have highlighted that one reason for the shortage of caregivers is that the wages of caregivers are effectively regulated through the fixed price imposed on LTC services, so that even though there is excess demand in the labor market for LTC, it has been difficult for care service providers to raise wages. Against this background, this study aims to examine how the increase in LTC compensation in 2009 affected the wages, working hours, and job separation rate of caregivers using microdata.
A challenge when examining the impact of the increase in LTC compensation on wages and labor supply is to isolate it from the impact of general macroeconomic developments on the labor market. To deal with this challenge, the approach employed here is to isolate the effect of the LTC compensation reform through difference-in-differences (DID) estimation, using the fact that within the greater Tokyo area LTC compensation was raised by 3 percentage points only in the 23 wards of Tokyo as a natural experiment. Specifically, we use these 23 wards as the treatment area, while the rest of Tokyo prefecture as well as the urban parts of Saitama, Kanagawa, and Chiba prefectures are used as the control area. The analysis focuses on non-regular part-time home helpers and regular fulltime nursing care staff. As dependent variables, the wages, working hours, and job separation rates of the two types of carers are employed.
For wages, while for both types of carers no significant increase in scheduled wages is found, a significant increase in total wages － i.e., including allowances, lump-sum payments, etc. - is observed. Therefore, it seems that LTC providers used the increased income resulting from the hike in LTC compensation to raise wages through allowances and lump-sum payments. On the other hand, no significant change in working hours for both types of carers is found. For regular full-time nursing care staff, working hours are stipulated in advance, so that even if their total wages increase, this is unlikely to have a substantial effect on their working hours. Meanwhile, for non-regular part-time home helpers, the income tax-related so-called "wall of 1.03 and 1.30 million yen" may have led some carers to reduce their working hours, which may have cancelled out any increase in working hours of workers not affected by this "wall." Finally, the job separation rate of non-regular part-time home helpers declined significantly following the reform. This is likely due to an increase in carers that decided not to quit their job due to the improvement in working conditions brought about by the increase in total wages.
