Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/252070 
Year of Publication: 
2022
Series/Report no.: 
CESifo Working Paper No. 9553
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We study the dynamic drivers of expenditure on long-term care (LTC) programs, and more specifically, the effects of labour market participation of traditional unpaid caregivers (women aged 40 and older) on LTC spending. Next, we examine the spillover effects of a rise in LTC expenditure on health care expenditures (HCE) and the economy (GDP). Our estimates draw from a panel of more than a decade worth of expenditure data from a sample of OECD countries. We use a panel Vector Auto-regressive (panel-VAR) system that considers the dynamics between the dependent variables. We find that LTC expenditure increases with the rise of the labour market participation of the traditional unpaid caregiver (women over 40 years of age), and that such expenditures rise exerts large spillover effects on health spending components. We find that a 1% increase in female labour participation gives rise to a 1.48% increase in LTC expenditure and a 0.88% reduction in HCE. The effect of LTC spending over HCE is mainly driven by a reduction in inpatient and medicine expenditures, exhibiting large country heterogeneity. Finally, we document significant spillover effects of LTC expenditures on per capita GDP.
Subjects: 
long-term care spending
panel-VAR
dynamic panel data
female labour market participation
health spending
care spillovers
JEL: 
I18
J10
Document Type: 
Working Paper
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