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Indirect Fiscal Effects of Long-Term Care Insurance

Author

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  • Johannes Geyer
  • Peter Haan
  • Thorben Korfhage

Abstract

Informal care by close family members is the main pillar of most longterm 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.

Suggested Citation

  • Johannes Geyer & Peter Haan & Thorben Korfhage, 2015. "Indirect Fiscal Effects of Long-Term Care Insurance," Discussion Papers of DIW Berlin 1520, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1520
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    References listed on IDEAS

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    1. Johannes Geyer & Thorben Korfhage, 2015. "Long‐term Care Insurance and Carers' Labor Supply – A Structural Model," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1178-1191, September.
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    Cited by:

    1. Johannes Geyer & Thorben Korfhage, 2018. "Labor supply effects of long‐term care reform in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 27(9), pages 1328-1339, September.
    2. Korfhage, Thorben, 2019. "Long-run consequences of informal elderly care and implications of public long-term care insurance," Ruhr Economic Papers 813, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Geyer, Johannes, 2020. "Notes about Comparing Long-Term Care Expenditures across Countries. Comment on "Financing Long-Term Care: Lessons from Japan"," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 9(2), pages 80-82.
    4. Johannes Geyer & Salmai Qari & Hermann Buslei & Peter Haan, 2021. "DySiMo Dokumentation: Version 1.0," Data Documentation 101, DIW Berlin, German Institute for Economic Research.
    5. Heger, Dörte & Korfhage, Thorben, 2016. "Care choices in Europe: To each according to his needs?," Ruhr Economic Papers 649, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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    More about this item

    Keywords

    labor supply; long-term care; long-term care insurance; structural model;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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