Abstract
ABSTRACT Informal caregivers, often family members, provide valuable services to elderly persons with long-term care needs. However, the time commitment of caregiving often competes against time spent in the labor force. In addition to the momentary trade-off, long-term consequences are possible since older workers in particular might find it difficult to reenter the labor market after a period of caregiving. While several studies document a negative relationship between caregiving and paid work, little is known about whether this effect persists over time. Analyzing a large panel data set of fifteen European countries and Israel, this study shows that care provision for an elderly parent has negative effects on employment rates and paid working hours for both men and women. While men are more likely to drop out of the labor force, especially in response to continuous caregiving, women, on average, also reduce their paid working hours. HIGHLIGHTS Adults who provide informal unpaid care for aging parents may struggle to maintain full-time paid employment. In aging societies the problem will become acute, as mature workers who leave paid jobs for caregiving risk future financial challenges. Short-term caregiving reduces both men’s and women’s probabilities of paid employment; longer-term caregiving has labor market outcomes that reflect traditional gender roles. Policymakers could reduce financial risks for informal caregivers by encouraging work flexibility, instituting paid leaves, and facilitating return to full-time paid work after stints of part-time employment.
Highlights
When a parent’s health declines, adult children are often faced with the decision whether to assist their parent with personal care or household chores
Acting as an informal caregiver often competes with participating in the labor force
Such opportunity costs of caregiving could be even larger if the negative relationship persists over time, that is, if the caregiving lasts for a prolonged period or if negative effects remain even after care has ended
Summary
When a parent’s health declines, adult children are often faced with the decision whether to assist their parent with personal care or household chores. To distinguish between short- and medium-term effects, we estimate the effects of only recent, only past, and continuous parental caregiving (CGor, CGop, and CGcont, respectively) on four distinct labor market outcomes: employment (E), retirement (R), the number of hours an individual works for pay per week (H), and a dummy variable indication full-time work (FT). Since we concentrate on the effect of caregiving in different time periods, we need to observe a sufficient number of individuals who have provided care in each time period as well as for consecutive time periods For this reason, we pool all countries and estimate (European) sample averages instead. The IV estimates measure the effect of recent caregiving as a result of an increase in parental need for care on the adult child’s labor force participation. Conditional on our control variables, our instruments are unlikely to have a direct effect on the adult child’s labor force participation
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