Social Insurance and the Labor Markets: Evidence from Long-Term Care

Social insurance programs can generate large aggregate shocks to the labor markets in sectors of the economy that offer goods and services covered by social insurance. While a large literature has examined the effect of social insurance programs on the behavior of beneficiaries, there is much less empirical evidence on the aggregate economic effects of these programs. In this paper we examine how the roll-out of an insurance program for long-term care in Germany affected the labor markets in the long-term care sector. We examine a variety of labor market outcomes, including the size of the labor force in the long-term care sector, the propensity of hiring new workers from unemployment, the wage profiles, and the quality of new jobs.