Can Government Expenditure Improve the Efficiency of Institutional Elderly-Care Service? – Take Wuhan as an Example

Abstract Whether government expenditure in elderly-care institutions can improve the efficiency of care in elderly-care institutions is not only related to the realisation of “Care for the Elderly,” but also one of the concerns of policymakers and implementers. In order to explore the impact of government expenditure on the efficiency of care in elderly-care institutions, DEA-Tobit two-stage model is used with a sample of 50 elderly-care institutions in Wuhan. Firstly, the efficiency of institutional elderly-care service is evaluated using the DEA method. Secondly, the Tobit regression model is employed to examine the effect of government expenditure on the efficiency of institutional elderly-care service. The research finds that government direct investment has no significant effect on the efficiency of care in elderly-care institutions, while fiscal subsidies can effectively improve it. Under the condition of controlling other variables, for every 10,000 yuan increase in fiscal subsidies, the value of comprehensive technical efficiency and pure technical efficiency of elderly-care institutions increase by 0.244 and 0.181, respectively. Therefore, to improve the efficiency of care in elderly-care institutions, fiscal subsidies should be chosen more often to purchase care in elderly-care institutions, and through it to guide the social forces to enter the field of nursing services.