The Economic Impact of Long-Term Care Services

Österreichisches Institut Für Wirtschaftsforschung Working Paper No. 580/2019

20 Pages Posted: 5 Dec 2019

See all articles by Gerhard Streicher

Gerhard Streicher

WIFO

Ulrike Famira-Mühlberger

Austrian Institute of Economic Research (WIFO)

Matthias Firgo

Austrian Institute of Economic Research (WIFO)

Date Written: April 1, 2019

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 EUR as well as 0.7 EUR 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.

Keywords: long-term care services, input-output model, returns to public expenditures

JEL Classification: H53, I19, J14

Suggested Citation

Streicher, Gerhard and Famira-Mühlberger, Ulrike and Firgo, Matthias, The Economic Impact of Long-Term Care Services (April 1, 2019). Österreichisches Institut Für Wirtschaftsforschung Working Paper No. 580/2019 , Available at SSRN: https://ssrn.com/abstract=3489899 or http://dx.doi.org/10.2139/ssrn.3489899

Gerhard Streicher (Contact Author)

WIFO ( email )

P.O. Box 91
Wien, A-1103
Austria
+43 1 7982601 272 (Phone)

Ulrike Famira-Mühlberger

Austrian Institute of Economic Research (WIFO) ( email )

P.O. Box 91
Wien, A-1103
Austria

Matthias Firgo

Austrian Institute of Economic Research (WIFO) ( email )

Arsenal Objekt 20
Wien, 1030
Austria
+43-1-7982601-471 (Phone)

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