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The Economic Impact of Long-term Care Services

Author

Listed:
  • Gerhard Streicher
  • Ulrike Famira-Mühlberger

    (WIFO)

  • Matthias Firgo

Abstract

Projections show sharp increases in public spending on long-term care services across Europe. However, a purely cost based focus on long-term care services is economically misleading. Private and public expenditure on long-term care services directly and indirectly generate income in the form of salaries, taxes and social security contributions. The aim of this paper is to quantify the economic impact and multipliers of long-term care services for the first time. Based on an econometric regional input-output model for Austria, we estimate the direct, indirect and induced effects of public and private expenditures on value added, employment, taxes and social security contributions. According to our results, each Euro spent on long-term care services is associated with domestic value added of 1.7 € as well as 0.70 € in taxes and social security contributions. The economic multipliers of the long-term care services are comparatively high due to the high share of wages and salaries in direct expenditure and the associated high direct value added. Public expenditure on professional care services should therefore not be regarded merely as a cost factor in the public budget. Rather, this rapidly growing economic sector is also an increasingly important economic factor in a time of ageing societies.

Suggested Citation

  • Gerhard Streicher & Ulrike Famira-Mühlberger & Matthias Firgo, 2020. "The Economic Impact of Long-term Care Services," WIFO Working Papers 580, WIFO.
    • Handle: RePEc:wfo:wpaper:y:2019:i:580
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    File URL: https://www.wifo.ac.at/wwa/pubid/61734
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    References listed on IDEAS

    as
    1. Ulrike Famira-Mühlberger & Matthias Firgo, 2018. "Aktuelle und künftige Versorgungsfunktion der mobilen Pflege- und Betreuungsdienste in Österreich," WIFO Studies, WIFO, number 61563, February.
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