and cleaning. The result is that almost everybody who today live in so called special housing are demented.

A large share of the care for elderly is still done by relatives and neighbors, in particular by wives to elderly men and by children. Will it in the future become possible to for relatives to continue doing so, and would it become possible to shift even more of the care burden from the public to relatives?

An important issue is how we in the future will finance the expected increase in expenditures for health care and social care. Will tax increases become necessary or can we shift more of the expenditures to the users of the care services by increasing the user-fees? If we do so, will those in most need of care be able to pay for it?

Are there other policy measures which could ease the balance between the future demand for resources and the supply? Policy measures which have been discussed are an increase in the pension age, activities which increase the health status and survival of the elderly, increased incentives for kin to provide care for their elderly, measures to increase labor supply such as increased immigration and incentives for those on sick benefits and disability pension to return to the labor market, and finally, measures to increase economic productivity.

#### 3.5.2 Why use SESIM?

Around year 2000 an independent group of scientists decided to analyze these policy issues. The project got the nick name “The old baby-boomers”. Our choice of scientific approach was guided by the following considerations. We needed an approach by which we could simulate the consequences of population ageing for at least 40 years. We would thus have to rely on a demographic model which in a realistic way could age the Swedish population. Our approach must also include a detailed and realistic replica of the tax and benefit system, and in particular the pension system. The approach chosen should not only be able to simulate means, but whole distributions, and at the same time provide consistent macro aggregates. It must also be able to capture many different aspects of behavior such as labor supply, geographical mobility, demand for housing, demand for health care and social care etc, and tell us to what extent the increased demand for care will become balanced by increased labor force participation, work, incomes and taxes. We should be able to focus on selected target groups, such as the poor or those in special need of care, and get estimates for these groups which were consistent with the estimates for the rest of the population. To accommodate this we needed a model structure which captured the heterogeneity in behavior of people. We also wanted to follow selected birth cohorts over time to see if their situation changed as they aged, and finally, it was important to be able to time any peak in the demand for care or in the incidence of poverty.

Taking all this into account there is hardly any better approach than a microsimulation approach. But to build a new large scale microsimulation model is a major undertaking which requires a team of scientists from different academic disciplines representing various types of expertise. It takes time and large resources, which we did not have. For this reason we looked for an already existing model which could give us a basic demographic model, the tax-and benefit system and a computer infrastructure. The SESIM model of the Ministry of