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

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  • Olena Nizalova

    (Kyiv School of Economics, Kyiv Economic Institute)

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. The lower bound of this elasticity is estimated to be -1.8 for males and -3.6 for females. Additional findings suggest that the wage elasticity of informal care supply di ers by the type of care provided to elderly parents, and that it is larger in magnitude among individuals with siblings and those with independently living parents. The analysis also indicates that the reductions in the informal care constitute about 18% of the labor supply response for men and about 56% of the labor supply response for women, which are not compensated by monetary transfers.

Suggested Citation

  • Olena Nizalova, 2010. "The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study," Discussion Papers 32, Kyiv School of Economics, revised Nov 2011.
    • Handle: RePEc:kse:dpaper:32
    Note: Forthcoming in Southern Economic Journal
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    Cited by:

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    2. Fischer, Björn & Haan, Peter & Sanchez, Santiago Salazar, 2022. "The effect of unemployment on care provision," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    3. Eric Bonsang & Joan Costa-Font & Joan Costa-i-Font, 2023. "The “Demise of the Caregiving Daughter”? Gender Employment Gaps and the Use of Formal and Informal Care in Europe," CESifo Working Paper Series 10792, CESifo.
    4. Bonsang, Eric & Costa-Font, Joan, 2023. "The "Demise of the Caregiving Daughter"? Gender Employment Gaps and the Use of Formal and Informal Care in Europe," IZA Discussion Papers 16615, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    Wage Elasticity; Informal Care Supply; Labor Supply; Elderly Care; Family Obligations;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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