Opportunity wages and workforce adjustments: understanding the cost of in-home elder care.

Abstract

Time spent providing informal care represents a real cost to caregivers and potentially affects their decisions about alternative activities, including paid work. This study offers estimates of opportunity wages incurred by informal caregivers and explores the impact of these costs on their decisions to reduce or abandon workforce participation. We consider caregivers at two points in time: 1982 and 1989. Our estimates of caregivers' imputed wages vary more widely and range higher than those reported elsewhere, varying from $0.78 to $27.18 per hour, compared to values in the literature ranging from $4.64 to $10.30. In both years, caregivers with higher imputed wages were significantly more likely to work, with this effect stronger in 1989 as all noneconomic factors became less important. However, accommodation (working fewer hours or foregoing job opportunities) decreased with higher imputed wages in 1982 only. In 1989, elders' frailty became a significant determinant of accommodation.