By Christine de la Maisonneuve & Joaquim Oliveira Martins

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Extra resources for A PROJECTION METHOD FOR PUBLIC HEALTH AND LONG-TERM CARE EXPENDITURES ECONOMICS DEPARTMENT WORKING PAPERS No. 1048

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Based on real expenditure deflated by the GDP deflator, they find that both health expenditure and GDP contain a panel unit root and are co-integrated when a time trend is included in the model. The authors find that GDP has a positive and statistically significant effect on health but obtain mixed results concerning the income elasticity by country. For the panel as a whole the income elasticity is around one. Based on real expenditure deflated by the health deflator, GDP and health spending are found to be non-stationary and co-integrated with and without a trend.

01 percentage points) for non-OECD countries. 2 The cost-containment scenario 56. 6% of GDP. 5 percentage points. 8 percentage points). 01 percentage points) for non-OECD countries. 3 Sensitivity analysis 57. Given the uncertainty about income effects, projections were performed also assuming an income elasticity of two for the cost-containment scenario for OECD countries. 5. 5% of GDP in 2060. 7 percentage points of GDP. Again, the assumptions underlying the GDP projections assume some catch-up for these low income countries, explaining why their LTC expenditure patterns are more affected by the higher income elasticity assumption.

The estimated influence of each of the non-demographic drivers of LTC expenditures has been used to parameterise the projection equation in Box 5. 13 The relative price effect may be limited by a growing share of immigrants among LTC workers. , (2011), foreign-born workers play a significant and growing role in LTC in some countries. The average wage of the immigrant work force is lower than that of native workers and their bargaining power is weaker. The process of equalising the wages of foreign-born and native work forces will take time, but will certainly materialise over the long-run.

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