Hard times for long-term care systems? Spillover effects on the Spanish economy

Abstract

Since the end of the last century, demographic aging has led to an increased demand for new social protection services. Universalizing these to meet the needs of the most vulnerable requires the design of policies that ensure the sustainability of the system. Consequently, the economic structure of a country and its productive fabric are affected. Assessing the impact of this growing demand is not an easy task, although extended input-output models can help. With this aim, we determine the spillover effects of the demand shocks arising from the increase in public spending allocated for the implementation of the Spanish long-term care system. The results reveal that such spending proves efficient in sustaining 116,000 jobs, most of which are in social work activities, entailing a large amount of direct but low-skilled employment. In addition, 5,000 million euros are generated in value added, including a fiscal return of 1,400 million euros.