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Indirect Fiscal Effects of Long-Term Care Insurance

Diskussionspapiere extern

Johannes Geyer, Peter Haan, Thorben Korfhage

Essen [u.a.]: RWI [u.a.], 2015, 30 S.
(Ruhr Economic Papers ; 584)

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.

Johannes Geyer

Deputy Head in the Public Economics Department

Peter Haan

Head of Department in the Public Economics Department



JEL-Classification: J22;H31;I13
Keywords: labor supply, long-term care, long-term care insurance, structural model
DOI:
http://dx.doi.org/10.4419/86788676

Frei zugängliche Version: (econstor)
http://hdl.handle.net/10419/122195

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