Indirect fiscal effects of long-term care insurance

Johannes Geyer, Peter Haan and Thorben Korfhage

No 584, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Informal care by close family members is the main pillar of most long-term care systems. However, due to demographic ageing the need for long-term care is expected to increase while the informal care potential is expected to decline. From a budgetary perspective, informal care is often viewed as a cost-saving alternative to subsidized formal care. This view, however neglects that many family carers are of working age and face the difficulty to reconcile care and paid work which might entail sizable indirect fiscal effects related to forgone tax revenues, lower social security contributions and higher transfer payments. In this paper we use a structural model of labor supply and the choice of care arrangement to quantify these indirect fiscal effects of informal care. Moreover, based on the model we discuss the fiscal effects related to non-take-up of formal care.

Keywords: labor supply; fiscal effects; long-term care insurance; structural model (search for similar items in EconPapers)
JEL-codes: H31 I13 J22 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-age, nep-hea and nep-ias
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Citations: View citations in EconPapers (4)

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Working Paper: Indirect Fiscal Effects of Long-Term Care Insurance (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:584

DOI: 10.4419/86788676

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