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The chicken or the egg?: Endogeneity in labour market participation of informal carers in England

  • Heitmueller, Axel

Informal care is a vital pillar of the British welfare state. A well-known fact in the small economic literature on informal care is the apparent negative relation between care responsibilities and labour market participation. Yet, caring and labour market participation may be endogenous. Using an instrumental variable approach and data from the British Household Panel Study for 2002 this paper shows that not accommodating for endogeneity in the labour market participation equation may significantly underestimate the impact care exhibits on the employment decision of informal carers. This is the more the case the smaller the choice of becoming a carer. Policy implications are derived.

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Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 26 (2007)
Issue (Month): 3 (May)
Pages: 536-559

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Handle: RePEc:eee:jhecon:v:26:y:2007:i:3:p:536-559
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  1. Bell, David N.F. & Heitmueller, Axel, 2005. "The Disability Discrimination Act in the UK: Helping or Hindering Employment Amongst the Disabled?," IZA Discussion Papers 1476, Institute for the Study of Labor (IZA).
  2. Tania Burchardt, 2003. "Being and becoming: Social exclusion and the onset of disability," CASE Reports casereport21, Centre for Analysis of Social Exclusion, LSE.
  3. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2002. "Instrumental variables and GMM: Estimation and testing," Boston College Working Papers in Economics 545, Boston College Department of Economics, revised 14 Feb 2003.
  4. Susan L. Ettner, 1996. "The Opportunity Costs of Elder Care," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 189-205.
  5. Liliana Pezzin & Barbara Schone, 1999. "Parental marital disruption and intergenerational transfers: An analysis of lone elderly parents and their children," Demography, Springer, vol. 36(3), pages 287-297, August.
  6. 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).
  7. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  8. Carmichael, Fiona & Charles, Sue, 1998. "The labour market costs of community care1," Journal of Health Economics, Elsevier, vol. 17(6), pages 747-765, December.
  9. Susan Ettner, 1995. "The impact of “parent care” on female labor supply decisions," Demography, Springer, vol. 32(1), pages 63-80, February.
  10. 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.
  11. 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.
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