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Long-Run Consequences of Informal Elderly Care and Implications of Public Long-Term Care Insurance

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  • Thorben Korfhage

Abstract

In this paper, I estimate a dynamic structural model of labor supply, retirement, and informal care supply, incorporating labor market frictions and the German tax and benefit system. I find that informal elderly care has adverse and persistent effects on labor market outcomes and therefore negatively affects lifetime earnings, future pension benefits, and individuals’ well-being. These consequences of caregiving are heterogeneous and depend on age, previous earnings, and institutional regulations. Policy simulations suggest that, even though fiscally costly, public long-term care insurance can offset the personal costs of caregiving to a large extent – in particular for low-income individuals.

Suggested Citation

  • Thorben Korfhage, 2019. "Long-Run Consequences of Informal Elderly Care and Implications of Public Long-Term Care Insurance," SOEPpapers on Multidisciplinary Panel Data Research 1051, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp1051
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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. Zhu, Rong & Onur, Ilke, 2023. "Does retirement (really) increase informal caregiving? Quasi-experimental evidence from Australia," Journal of Health Economics, Elsevier, vol. 87(C).

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    More about this item

    Keywords

    long-term care; informal care; long-term care insurance; labor supply; retirement; pension benefits; structural model;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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