Stimulating OECD economies post-COVID by investing in care

As the COVID-19 pandemic has laid bare both the weakness of many countries’ care systems and their vital importance to social reproduction, this paper, written by Jerome De Henau, Senior Lecturer in Economics and Susan Himmelweit, Emeritus Professor, argues for a care-led recovery with public investment in high-quality care services and better conditions for care workers.

Using input-output analysis, across selected EU countries and the US, the superior employment outcomes of investment in care over investment in construction are shown not to depend on care’s lower pay and shorter hours. Further, the fiscal returns from investing in care are higher, allowing greater investment for the same net cost. In particular, equalizing care spending and wage levels to those of Sweden, the most generous country in the study, would double employment in care, raise employment rates by 4 and 6 percentage points and reduce gender employment gaps by 4 and 6 percentage points, respectively, across the EU overall and in the US.