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Does the Expansion of Public Long-Term Care Funding Affect Savings Behaviour?

34 Pages Posted: 29 Nov 2016  

Joan Costa-Font

London School of Economics & Political Science (LSE)

Cristina Vilaplana

University of Murcia

Date Written: October 20, 2016

Abstract

We study the effect of further public caregiving subsidies (and insurance expansions to cover long-term care) on savings and saving behaviour. Specifically, weexamine the unique progressive introduction of a universal public long-term care subsidy (Sistema para la Autonomía y Atención a la Dependencia, SAAD) in Spain. We draw on a difference-in-difference strategy (DID) to show a contraction of savings after the policy intervention, but only among younguer elders who receive primarily cash benefits (unconditional caregiving allowance) as opposed to home help (ranging between 13% and 38% of the subsidy ammount). Saving reductions of individuals in the second and third quintile of income distribution, those without children and those residing in regions that implemented the reform earlier, drive the effect.

Keywords: long-term care insurance, savings, saving behaviour, long term care services and support, universalisation, Spain

JEL Classification: I180, D140, G220

Suggested Citation

Costa-Font, Joan and Vilaplana, Cristina, Does the Expansion of Public Long-Term Care Funding Affect Savings Behaviour? (October 20, 2016). CESifo Working Paper Series No. 6135. Available at SSRN: https://ssrn.com/abstract=2876554

Joan Costa-Font (Contact Author)

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://www.lse.ac.uk/people/j.costa-font@lse.ac.uk/

Cristina Vilaplana

University of Murcia ( email )

Avda Teniente Flomesta, 5
Murcia, 30100
Spain

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