Abstract
Abstract Although a public long-term care (LTC) program is a potentially important factor for the labor supply of female informal caregivers, there are only a handful of individual-level studies on this topic and the macro-level impacts of LTC programs are still largely unknown. Exploiting the introduction of nationwide long-term care insurance (LTCI) in Japan and utilizing a synthetic control method, we examine how LTCI introduction has altered the trends of public expenditures on in-kind benefits for the elderly, public health expenditure, and female labor force participation. The estimation results using the panel data of OECD countries (1980–2013) suggest that LTCI introduction substantially increased the in-kind benefits for the elderly by around one percentage point of GDP 10 years after LTCI introduction, but we do not find a positive effect on the labor force participation for middle-aged women. The fact that we do not observe any positive LTCI effects on middle-aged female labor force participation on a macro level implies that positive LTCI effects on female labor supply observed in some previous microlevel studies may be cancelled out by some other factors or are small enough to be detected under a general-equilibrium setting.
Highlights
The introduction or expansion of a social insurance program is one of the most essential and controversial public policy issues in both developed and developing countries
synthetic control (SC) 1 in the graph is constructed from the original donor pool and its values are regarded as baseline counterfactual outcomes in the post-intervention period; that is, they represent the levels of in-kind benefits for the elderly if long-term care insurance (LTCI) had not been introduced in Japan
We investigate the impact of this LTCI introduction on fiscal outcomes and female labor force participation, exploiting the quasi-experimental features of LTCI introduction and using an SC method
Summary
The introduction or expansion of a social insurance program is one of the most essential and controversial public policy issues in both developed and developing countries. To overcome the difficulty of finding a reliable control group within the same country, we estimate the nationwide aggregate impact of a large-scale LTCI introduction in Japan on public finance and female labor force participation, utilizing within-country variations in the country-level panel data. Most previous studies of LTCI effects on labor supply, which we will discuss, use individual-level data to identify partial-equilibrium effects, explicitly or implicitly investigating changes in the labor supply of informal caregivers before and after LTCI introduction These microlevel partial effects are informative and policy-relevant, but they do not provide information about how a nationwide universal LTCI introduction has (or has not) changed the country in question’s aggregate fiscal and labor-market conditions (see, among others, Heckman et al, 1998; Blundell et al, 2004; Finkelstein, 2007) for the distinction between a partial-equilibrium effect and a general-equilibrium effect in social program evaluations.
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