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Reforming Long-Term Care in Germany: A Simulation Study

Author

Listed:
  • Hans Fehr
  • Gitte Halder

Abstract

The present study quanti?es the revenue and distributional effects of various reform options for the German long-term care system. Starting from a baseline path of the economy which represents the existing public and private mixture of the German long-term care system, we either switch to a pay-as-you-go ?nanced citizen premium or alternative funded systems of long-term care. Our simulations indicate three central policy implications of the discussed reform models. First, the citizen premium model has negligible labor market effects while a move to a funded system improves employment significantly in the long run. Second, while the citizen premium model mainly redistributes within generations, all models with funded premiums mainly redistribute across generations. Third, a delayed elimination of the pay-as-you-go system as proposed by the Herzog commission might be preferred to an immediate funding strategy since the former smoothes the short-run redistributive e?ects while keeping the long run gains of future generations.

Suggested Citation

  • Hans Fehr & Gitte Halder, 2006. "Reforming Long-Term Care in Germany: A Simulation Study," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 52(1), pages 75-98.
  • Handle: RePEc:aeq:aeqaeq:v52_y2006_i1_q1_p75-98
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    Cited by:

    1. Busl, Claudia & Iliewa, Zwetelina & Jokisch, Sabine & Kappler, Marcus & Roscher, Thomas & Schindler, Felix & Schleer, Frauke, 2012. "Endbericht an das Bundesministerium der Finanzen zum Forschungsauftrag fe 11/11: "Sparen und Investieren vor dem Hintergrund des demografischen Wandels"," ZEW Expertises, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research, number 110554.

    More about this item

    Keywords

    CGE models; long-term care reform in Germany;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts

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