ANALYSIS

The following model forms the basis for our analysis.

The factors that were used in this model are municipal, calendar time and age
group fixed effects
After plotting the data points, this is how the graph looks like
This graph shows the mean difference in mortality rates between those older than
69 and those younger than 70 for the municipalities that have partially privatized
provision at time 0 against the corresponding mean difference of those that did not
reform.

Our specification implies equal proportional effects on the mortality rate for all age
groups affected by privatization. This is a reasonable specification due to these 2
reasons: from the age of 40 at least until age of 90, the logarithm of mortality in
general rises more or less linearly with age. For this reason, we prefer a logarithmic
model in the estimation of the effect of privatization. The second reason is that the
share of each age group that lives in nursing homes is highly correlated with the per
age group average mortality rate