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Long-term Care Responsibility and its Opportunity Costs

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  • Annika Meng

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Abstract

This paper analyzes the relationship between long-term care provision and the average individual wage rate. In addition, the eff ects of the number of hours spent on caregiving on the probability of employment as well as on the number of hours worked are examined. Data from the Survey of Health, Ageing and Retirement (SHARE) of 2004 and 2006 is used to analyze caregiving eff ects on the European labor market. Descriptive statistics show a positive correlation between hours of care and the wage rate for those working. In the regression analysis, sample-selection models combined with instrumental-variable estimation are used to estimate the causal eff ects of hours of care on wages. The results illustrate that care for parents has a large negative impact on the individual’s wage rate. Test results show that controlling for sample selection is reasonable. Finally, the probability of employment is only decreased in the female sample. Although the hours worked are not signicantly affected.

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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 0168.

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Length: 29 pages
Date of creation: Feb 2010
Date of revision:
Handle: RePEc:rwi:repape:0168

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Keywords: Informal care; labor-market outcomes; sample selection;

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  1. 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.
  2. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
  3. K. Bolin & B. Lindgren & P. Lundborg, 2007. "Your Next of Kin or your Own Career? Caring and Working among the 50+ of Europe," Tinbergen Institute Discussion Papers 07-032/3, Tinbergen Institute.
  4. Heitmueller, Axel, 2007. "The chicken or the egg?: Endogeneity in labour market participation of informal carers in England," Journal of Health Economics, Elsevier, vol. 26(3), pages 536-559, May.
  5. Annika Meng, 2009. "Informal Home Care and Labor Force Participation of Household Members," Ruhr Economic Papers 0152, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  6. 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.
  7. Steven Stern, 1995. "Estimating Family Long-Term Care Decisions in the Presence of Endogenous Child Characteristics," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 551-580.
  8. J. Jenson & Stéphane Jacobzone, 2000. "Care Allowances for the Frail Elderly and Their Impact on Women Care-Givers," OECD Labour Market and Social Policy Occasional Papers 41, OECD Publishing.
  9. 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).
  10. Carmichael, Fiona & Charles, Sue, 1998. "The labour market costs of community care1," Journal of Health Economics, Elsevier, vol. 17(6), pages 747-765, December.
  11. Colin Vance, 2006. "Marginal Effects and Significance Testing with Heckman’s Sample Selection Model: A Methodological Note," RWI Discussion Papers 0039, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  12. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  13. 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.
  14. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  15. Smith, Richard J & Blundell, Richard W, 1986. "An Exogeneity Test for a Simultaneous Equation Tobit Model with an Application to Labor Supply," Econometrica, Econometric Society, vol. 54(3), pages 679-85, May.
  16. Heitmueller, Axel & Inglis, Kirsty, 2007. "The earnings of informal carers: Wage differentials and opportunity costs," Journal of Health Economics, Elsevier, vol. 26(4), pages 821-841, July.
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