A general disequilibrium benefit/cost analysis of elder care facilities in Mexico for United States citizens

Benefit/cost analysis is used to analyze a Mexican elder care project designed to serve U.S. citizens relocating to Mexico for care. The Mexican elder-care provider will be organized as a Mondragon-type worker-owned-and-managed cooperative. The worker-owners will be Mexican citizens drawn from the lower rungs of the socio-economic ladder. The U.S. citizens they will serve are elders who are unable to pay for quality elder-care in the United States. Beginning in 2008, the share of the U.S. population aged 65 and older is projected to increase rapidly as the baby-boom generation retires, and is expected to remain far above current levels indefinitely unless birth rates rise significantly. The demand for long-term care is expected to increase proportionately. Because the services required by aging seniors are relatively labor-intensive, and because Mexican labor is cheap relative to U.S. labor, encouraging more seniors to relocate to Mexico might make an important contribution to health care cost containment in the U.S. The General Disequilibrium methodology developed by Professor Daniel Schydlowsky of American University is employed to estimate shadow prices for Mexico's labor, capital and foreign exchange markets, and to perform the benefit/cost analysis. An extensive profile of the Mexican labor market supports a shadow price of labor that is zero or even negative. The project is found to be beneficial to Mexico under several sets of assumptions.