ZEW - Centre for European Economic Research

04/24/2024 | Press release | Distributed by Public on 04/24/2024 06:17

Long-Term Care Insurance Offsets Labour Market Disadvantages // ZEW Study on the Effects of Long-Term Care Insurance on Private Care

ZEW Study on the Effects of Long-Term Care Insurance on Private Care

It remains important that long-term care insurance largely compensates for the disadvantages in the labour market and pensions.

In the future, more and more people in Germany will require care. In most cases, relatives and friends become the caretakers for these people. This leads to immense costs due to reduced working hours, incomes and pensions. Benefits provided by long-term care insurance, such as care allowances and pension points, help to largely offset these disadvantages. However, they also reduce incentives to work. This is what researchers from ZEW Mannheim and RWI Essen found in an empirical study based on data from the Socio-Economic Panel (SOEP).

"Without the benefits of long-term care insurance, much less care work would be done. In an ageing society with a shortage of skilled workers, it is essential that this care is provided. However, the personal costs of care are immense. That is why it remains important that long-term care insurance largely compensates for the disadvantages in the labour market and pensions. Policymakers should definitely maintain long-term care insurance. After all, it makes sense to support those who already know the care recipients and provide voluntary assistance. Otherwise, there would be a need for many more professionals, who would also require housing, etc. There would be no financial gain. However, the labour market costs of care by relatives must not be overlooked," explains Dr. Björn Fischer, co-author of the study and Junior Research Associate at ZEW's "Labour Markets and Social Insurance" Unit.