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Informal home care and labor-force participation of household members

  • Annika Meng

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    In Germany, informal home care is preferred to professional care services in the public discussion as well as in legal care regulations. However, only minor importance is ascribed to the opportunity costs caregivers face. Therefore, this article explores the influence home care has on the labor supply of caregivers who cohabitate with the care recipient. I use data from the German Socio-Economic Panel from 2001 to 2007, which allows researchers to merge the characteristics of both groups for the first time. Owing to diverging gender roles, I examine female and male caregivers separately. The results show that having an individual in need of care in the household does not decrease labor supply to an economically relevant quantity. As providing care might be endogenous to the labor-supply decision, I test for endogeneity by using characteristics of care recipients as instruments and I additionally test for sample attrition. Moreover, the panel structure allows me to control for unobserved heterogeneity. Copyright Springer-Verlag 2013

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    File URL: http://hdl.handle.net/10.1007/s00181-011-0537-1
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    Article provided by Springer in its journal Empirical Economics.

    Volume (Year): 44 (2013)
    Issue (Month): 2 (April)
    Pages: 959-979

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    Handle: RePEc:spr:empeco:v:44:y:2013:i:2:p:959-979
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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. 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.
    3. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, vol. 65(3), pages 557-586, May.
    4. Susan Ettner, 1995. "The impact of “parent care” on female labor supply decisions," Demography, Springer, vol. 32(1), pages 63-80, February.
    5. Heitmueller, Axel, 2004. "The Chicken or the Egg? Endogeneity in Labour Market Participation of Informal Carers in England," IZA Discussion Papers 1366, Institute for the Study of Labor (IZA).
    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. 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.
    8. 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.
    9. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
    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. 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.
    12. Matthias Keese & Annika Meng & Reinhold Schnabel, 2010. "Are You Well Prepared for Long-term Care? – Assessing Financial Gaps in Private German Care Provision," Ruhr Economic Papers 0203, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    13. Susan L. Ettner, 1996. "The Opportunity Costs of Elder Care," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 189-205.
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