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'Investing' in Care for Old Age? An Examination of Long-Term Care Expenditure Dynamics and Its Spillovers

Joan Costa-i-Font and Cristina Vilaplana-Prieto
Authors registered in the RePEc Author Service: Joan Costa-i-Font

No 9553, CESifo Working Paper Series from CESifo

Abstract: We study the dynamic drivers of expenditure on long-term care (LTC) programs, and more specifically, the effects of labour market participation of traditional unpaid caregivers (women aged 40 and older) on LTC spending. Next, we examine the spillover effects of a rise in LTC expenditure on health care expenditures (HCE) and the economy (GDP). Our estimates draw from a panel of more than a decade worth of expenditure data from a sample of OECD countries. We use a panel Vector Auto-regressive (panel-VAR) system that considers the dynamics between the dependent variables. We find that LTC expenditure increases with the rise of the labour market participation of the traditional unpaid caregiver (women over 40 years of age), and that such expenditures rise exerts large spillover effects on health spending components. We find that a 1% increase in female labour participation gives rise to a 1.48% increase in LTC expenditure and a 0.88% reduction in HCE. The effect of LTC spending over HCE is mainly driven by a reduction in inpatient and medicine expenditures, exhibiting large country heterogeneity. Finally, we document significant spillover effects of LTC expenditures on per capita GDP.

Keywords: long-term care spending; panel-VAR; dynamic panel data; female labour market participation; health spending; care spillovers (search for similar items in EconPapers)
JEL-codes: I18 J10 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-age and nep-hea
References: View references in EconPapers View complete reference list from CitEc
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Journal Article: ‘Investing’ in care for old age? An examination of long-term care expenditure dynamics and its spillovers (2023) Downloads
Working Paper: Investing in care for old age? An examination of long-term care expenditure dynamics and its spillovers (2023) Downloads
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