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The economic linkages of long-term care costs in Austria: assumptions and results

2018 Conference Presentation

Demand measurement and projection Austria

12 September 2018

The economic linkages of long-term care costs in Austria: assumptions and results

Gerhard Streicher, Austrian Institute for Economic Research, Austria

Ulrike Famira-Mühlberger, Austrian Institute for Economic Research, Austria
Matthias Firgo, Austrian Institute for Economic Research, Austria


Recent projections of long-term care costs across Western societies show a significant rise in the upcoming decades. This is mainly due to demographic developments, but also due to a reduction of families’ capacities to deliver informal care. Thus, an expansion of both mobile and in-patient care is inevitable. As the increasing demand alters both public and private expenditures, it is worth taking a look beyond the conventional costs-based evaluation of long-term care developments and to evaluate the economic effects induced by this growing sector. In that demand for care services increases, this poses chances for, but also puts demands on other sectors of the economy, which go beyond the immediate effects and costs of the care institutions. Against this background this paper presents a first analysis of the macroeconomic linkageslong-term care sector for the case of Austria.

For the estimation of the indirect and induced effects of long-term care we employ ASCANIO, a regional Input-Output model of the Austrian economy. This model simulates the economic linkages between 65 sectors (long-term care is a part of one of these sectors) and the 9 Austrian regions (as well as 42 other countries).The model estimates that through direct and indirect economic interlinkages, private and public expenditures on long-term care services in Austria of 3.4 bn € in 2015 were associated with direct, indirect and induced value added of 5.9 bn € and 115,000 jobs. These were further associated with tax revenues of 1.1 bn € and social security contributions of 1.3 bn €. The latter roughly correspond to a combined 70% of the direct expenditures on long-term care services. The economic multiplier of the long-term care service industry is comparatively high due to the high share of wages in the direct expenditures and the related high direct value added.