First reporting period:
In addition to setting up the organisation and the logistics of the project, such as the consortium agreement, the data management plan, a website, communication channels and meeting schedules, the first steps in the project are to build up a solid scientific base consisting of a set of (a) mathematical models, (b) an empirical database of stylized facts and (c) a systematic account of institutional features, especially LTC insurance.
To this end, we have
(a) set up the social insurance model (Deliverable 5.1 submitted 31.12.2023) and the overlapping generations (OLG) model to predict economic growth and its inclusiveness under the pressures of the care wave (Deliverable 6.1 submitted 31.12.2023). We have made great progress in refining the life-cycle models of family decisions, so we are sure we can submit this timely as Deliverables 3.1 and 3.2 end of June 2024.
(b) collected a large set of stylized facts. Since previous studies have focused on the impact of labour laws and income on LTC, while the roles of education, maternity leave and financial transfers have been underresearched, we focused on these three points. This has resulted in a document which has been submitted as Deliverable 3.1 on 31.12.2023.
(c) described the institutional features that are shaping the patterns of formal and informal care. Again, we focused on the roles of education, maternity leave and financial transfers, we focused on these three points. The resulting document has been submitted as Deliverable 3.2 on 31.12.2023.
Moreover, we have started the process of asking policy makers what – in their eyes – are the most pressing issues that this project should answer. This has generated a rather ambitious “theme catalogue” that has been submitted as Deliverable 2.1 on 31.12.2023. These themes will guide us in our future work and form the base for the policy recommendations at the end of this project.
Second reporting period:
The main work in the second reporting period was on the analytic core of the project, namely the set of three models: (a) micro model of economic decisions in the family relating to long-term care (LTC); (b) macro model of the impact of LTC on economic growth, wages and interest; and (c) social insurance model with demographic and employment projections.
(a) We have constructed two versions of the micro model. The first version assumes that among the siblings in the younger generation one child is selected early on to take care of the parent while the other siblings do not provide any kind of LTC. This child then chooses location, labor force participation etc. according to this plan and may receive more than an equal share of the eventual bequest. This “designated child model” has been submitted as Deliverable 3.1 end of June 2024. The second version assumes that the siblings cooperate in taking care of the parent in the course the parent’s life. The intensity of LTC by each child is jointly determined by decisions on location and labor forde participation in the course of the siblings’ life course. This “cooperative sibling’s model” has been submitted as Deliverable 3.2 end of June 2024.
(b) While there was no deliverable due regarding the macro model, we have reprogrammed this model to make it technically more efficient and to include a larger number of countries as recommended by the reviewers. The interface between the macro model and the other two models was intensily discussed at the 4th project meeting in Madrid in September 2024. The construction of common exogenous inputs such as the development of demographics and health will be the main topic of the 5th project meeting in Paris in March 2025.
(c) These common inputs are also applicable for the social insurance model (Deliverable 5.1 submitted at the end of the first reporting period) to project the demand and supply for labor for all jobs in the economy as well as for jobs related to LTC. We then computed the balance and, as expected, projected a large gap where the demand for labor by far exceeds the supply if current labor force participation prevails. In turn, we showed that currently unused labor potential (defined e.g. by early retirement and low female labor force participation) could fill this gap. These results have been submitted as Deliverable 5.2 end of December 2024.
In terms of preparing policy recommendations, we have arranged a “policy roundtable” in March 2024 with representatives of the Commission and other international organizations (e.g. OECD, WHO) which discussed topics from, and provided extensions to, our policy “theme catalogue” (Deliverable 2.1 a living document). Potential policy recommendations emanating from the model were also discussed in the many scientific seminars given by project participants.
