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Informal Home Care and Labor Force Participation of Household Members

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  • Annika Meng

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Abstract

In Germany, informal home care is preferred to professional care services in the public discussion as well as in legal care regulations. However, they ascribe only minor importance to the opportunity costs care givers have to face. Therefore, this paper explores the influence home care has on the labor supply of carers who live together with their care recipient. I am using the German Socio-Economic Panel of the years 2001 to 2007 which allows the characteristics of both groups to be merged. Furthermore, I look at female and male care givers separately. The results show that having an individual in need of care in the household does not decrease labor supply to an economically relevant extent. As caring and the labor supply decision might be endogenous, I test for endogeneity by using characteristics of care recipients as instruments and I look at sample attrition. In addition, the panel structure allows to control for unobserved heterogeneity, which is probably strong for care.

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Bibliographic Info

Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0152.

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Length: 38 pages
Date of creation: Nov 2009
Date of revision:
Handle: RePEc:rwi:repape:0152

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Keywords: Informal care; labor supply; endogeneity;

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References

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  1. Christine L. Himes & Ulrike Schneider & Douglas A. Wolf, 2001. "The Dynamics of Long-Term Care Service Use in Germany," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 153-158.
  2. Gary S. Becker, 1974. "A Theory of Social Interactions," NBER Working Papers 0042, National Bureau of Economic Research, Inc.
  3. Bolin, K. & Lindgren, B. & Lundborg, P., 2008. "Your next of kin or your own career?: Caring and working among the 50+ of Europe," Journal of Health Economics, Elsevier, vol. 27(3), pages 718-738, May.
  4. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1997. "Parental Altruism and Inter Vivos Transfers: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 105(6), pages 1121-66, December.
  5. Verbeek, M.J.C.M. & Nijman, T.E., 1990. "Testing for selectivity bias in panel data models," Discussion Paper 1990-18, Tilburg University, Center for Economic Research.
  6. Carmichael, Fiona & Charles, Sue, 1998. "The labour market costs of community care1," Journal of Health Economics, Elsevier, vol. 17(6), pages 747-765, December.
  7. Liliana E. Pezzin & Barbara Steinberg Schone, 1999. "Intergenerational Household Formation, Female Labor Supply and Informal Caregiving: A Bargaining Approach," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 475-503.
  8. Hayashi, Fumio, 1995. "Is the Japanese Extended Family Altruistically Linked? A Test Based on Engel Curves," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 661-74, June.
  9. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  10. Nijman, T.E. & Verbeek, M.J.C.M., 1992. "Testing for selectivity in panel data models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-153280, Tilburg University.
  11. 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.
  12. Fiona Carmichael & Susan Charles, 2003. "Benefit payments, informal care and female labour supply," Applied Economics Letters, Taylor & Francis Journals, vol. 10(7), pages 411-415.
  13. Altonji, Joseph G & Hayashi, Fumio & Kotlikoff, Laurence J, 1992. "Is the Extended Family Altruistically Linked? Direct Tests Using Micro Data," American Economic Review, American Economic Association, vol. 82(5), pages 1177-98, December.
  14. Heitmueller, Axel & Inglis, Kirsty, 2004. "Carefree? Participation and Pay Differentials for Informal Carers in Britain," IZA Discussion Papers 1273, Institute for the Study of Labor (IZA).
  15. Carmichael, Fiona & Charles, Susan, 2003. "The opportunity costs of informal care: does gender matter?," Journal of Health Economics, Elsevier, vol. 22(5), pages 781-803, September.
  16. Wooldridge, Jeffrey M., 1995. "Selection corrections for panel data models under conditional mean independence assumptions," Journal of Econometrics, Elsevier, vol. 68(1), pages 115-132, July.
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  18. repec:kas:wpaper:2005-71 is not listed on IDEAS
  19. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053.
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Cited by:
  1. Hohmeyer, Katrin & Kopf, Eva & Fiebig, Mareike & Grüttner, Michael, 2012. "Pflegetätigkeiten von Personen in Haushalten mit Arbeitslosengeld-II-Bezug : eine deskriptive Betrachtung," IAB-Forschungsbericht 201210, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  2. C. Katharina Spieß, 2011. "Vereinbarkeit von Familie und Beruf – wie wirksam sind deutsche „Care Policies“?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 4-27, 05.
  3. Annika Meng, 2010. "Long-term Care Responsibility and its Opportunity Costs," Ruhr Economic Papers 0168, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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