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The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study

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  • Olena Nizalova

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Abstract

This paper focuses on the relationship between wages and supply of informal care to elderly parents. Unlike most of the previous research estimating wage elasticities of informal care supply, this study employs instrumental variable technique to account for the fact that the wage rate is likely to be correlated with omitted variables. Based on the data from the 1998 wave of the Health and Retirement Study, the results show that the wage elasticity of informal care supply is negative and larger in magnitude than has been found previously. [IZA Discussion Paper No. 5192]

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Paper provided by eSocialSciences in its series Working Papers with number id:2916.

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Date of creation: Sep 2010
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Handle: RePEc:ess:wpaper:id:2916

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Keywords: wage elasticity; informal care supply; labor supply; elderly care; family obligations;

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  1. Sloan, F.A. & Zhang, H.H., 1995. "Upstream Intergenerational Transfers," GSIA Working Papers 1995-27, Carnegie Mellon University, Tepper School of Business.
  2. Mroz, Thomas A, 1987. "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," Econometrica, Econometric Society, vol. 55(4), pages 765-99, July.
  3. Yannis M. Ioannides & Kambon Kan, 1999. "The Nature of Two-Directional Intergenerational Transfers of Money and Time: An Empirical Analysis," Discussion Papers Series, Department of Economics, Tufts University 9917, Department of Economics, Tufts University.
  4. Meta Brown, 2006. "Informal Care and the Division of End-of-Life Transfers," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
  5. Casey B. Mulligan, . "The Intertemporal Substitution of Work--What Does the Evidence Say?," University of Chicago - Population Research Center 95-11, Chicago - Population Research Center.
  6. Leora Friedberg, 2000. "The Labor Supply Effects of the Social Security Earnings Test," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 48-63, February.
  7. Sloan, Frank A & Picone, Gabriel & Hoerger, Thomas J, 1997. "The Supply of Children's Time to Disabled Elderly Parents," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 295-308, April.
  8. Jonathan Gruber & Peter Orszag, 1999. "What To Do About The Social Security Earnings Test?," Issues in Brief ib-1, Center for Retirement Research.
  9. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
  10. Steven J. Haider & David S. Loughran, 2008. "The Effect of the Social Security Earnings Test on Male Labor Supply: New Evidence from Survey and Administrative Data," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
  11. Schokkaert, Erik, 2006. "The Empirical Analysis of Transfer Motives," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
  12. Julie Zissimopoulos, 2001. "Resource Transfers to the Elderly: Do Adult Children Substitute Financial Transfers for Time Transfers?," Working Papers 01-05, RAND Corporation Publications Department.
  13. Courtney C. Coile, 2004. "Health Shocks and Couples' Labor Supply Decisions," NBER Working Papers 10810, National Bureau of Economic Research, Inc.
  14. Baker, Michael & Benjamin, Dwayne, 1999. "How do retirement tests affect the labour supply of older men?," Journal of Public Economics, Elsevier, vol. 71(1), pages 27-51, January.
  15. Van Houtven, Courtney Harold & Norton, Edward C., 2004. "Informal care and health care use of older adults," Journal of Health Economics, Elsevier, vol. 23(6), pages 1159-1180, November.
  16. John Pencavel, 2002. "A Cohort Analysis of the Association between Work Hours and Wages among Men," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 251-274.
  17. Kenneth Couch & Mary Daly & Douglas Wolf, 1999. "Time? money? both? the allocation of resources to older Parents," Demography, Springer, vol. 36(2), pages 219-232, May.
  18. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102 Elsevier.
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