IDEAS home Printed from https://ideas.repec.org/p/diw/diwsop/diw_sp785.html
   My bibliography  Save this paper

Long-Term Care Reform and the Labor Supply of Household Members: Evidence from a Quasi-Experiment

Author

Listed:
  • Johannes Geyer
  • Thorben Korfhage

Abstract

Germany introduced a new mandatory insurance for long-term care in 1995 as part of its social security system. It replaced a system based on meanstested social welfare. Benefits from the long-term care insurance are not means tested and depend on the required level of care. The insurance provides both benefits in kind and cash benefits. The new scheme improved the situation for households to organize informal care at home. This was one goal of the reform since policymakers view informal care as a cost-saving alternative to formal care. This view however neglects possible opportunity costs of reduced labor supply of carers. We exploit this reform as a quasi-experiment and examine its effect on the labor supply of caregivers who live in the same household as the care recipient. We find strong negative labor market effects for men but not for women. We conduct a series of robustness tests and find results to be stable.

Suggested Citation

  • Johannes Geyer & Thorben Korfhage, 2015. "Long-Term Care Reform and the Labor Supply of Household Members: Evidence from a Quasi-Experiment," SOEPpapers on Multidisciplinary Panel Data Research 785, DIW Berlin, The German Socio-Economic Panel (SOEP).
    • Handle: RePEc:diw:diwsop:diw_sp785
    as

    Download full text from publisher

    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.512844.de/diw_sp0785.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Johannes Geyer & Thorben Korfhage, 2015. "Long‐term Care Insurance and Carers' Labor Supply – A Structural Model," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1178-1191, September.
    3. Lechner, Michael, 2011. "The Estimation of Causal Effects by Difference-in-Difference Methods," Foundations and Trends(R) in Econometrics, now publishers, vol. 4(3), pages 165-224, November.
    4. Løken, Katrine V. & Lundberg, Shelly & Riise, Julie, 2014. "Lifting the Burden: State Care of the Elderly and Labor Supply of Adult Children," Working Papers in Economics 03/14, University of Bergen, Department of Economics.
    5. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    6. Meghan M. Skira, 2015. "Dynamic Wage And Employment Effects Of Elder Parent Care," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 63-93, February.
    7. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    8. 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.
    9. Andy Zuchandke & Sebastian Reddemann & Simone Krummaker & J.-Matthias Graf von der Schulenburg, 2010. "Impact of the Introduction of the Social Long-Term Care Insurance in Germany on Financial Security Assessment in Case of Long-Term Care Need*," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 35(4), pages 626-643, October.
    10. 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.
    11. Johannes Geyer & Erika Schulz, 2014. "Who cares? Die Bedeutung der informellen Pflege durch Erwerbstätige in Deutschland," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 81(14), pages 294-301.
    12. Heger, Dörte, 2014. "Work and Well-Being of Informal Caregivers in Europe," Ruhr Economic Papers 512, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    13. Götting, Ulrike & Haug, Karin & Hinrichs, Karl, 1994. "The Long Road to Long-Term Care Insurance in Germany," Journal of Public Policy, Cambridge University Press, vol. 14(3), pages 285-309, July.
    14. Annika Meng, 2012. "Informal Caregiving and the Retirement Decision," German Economic Review, Verein für Socialpolitik, vol. 13(3), pages 307-330, August.
    15. Sugawara, Shinya & Nakamura, Jiro, 2014. "Can formal elderly care stimulate female labor supply? The Japanese experience," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 98-115.
    16. Susan Ettner, 1995. "The impact of “parent care” on female labor supply decisions," Demography, Springer;Population Association of America (PAA), vol. 32(1), pages 63-80, February.
    17. Carmichael, Fiona & Charles, Sue, 1998. "The labour market costs of community care1," Journal of Health Economics, Elsevier, vol. 17(6), pages 747-765, December.
    18. Erika Schulz, 2010. "The Long-Term Care System in Germany," Discussion Papers of DIW Berlin 1039, DIW Berlin, German Institute for Economic Research.
    19. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    20. Meghan M. Skira, 2015. "Dynamic Wage And Employment Effects Of Elder Parent Care," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56(1), pages 63-93, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schmitz, Hendrik & Westphal, Matthias, 2017. "Informal care and long-term labor market outcomes," Journal of Health Economics, Elsevier, vol. 56(C), pages 1-18.
    2. Johannes Geyer & Thorben Korfhage, 2015. "Long‐term Care Insurance and Carers' Labor Supply – A Structural Model," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1178-1191, September.
    3. Lichtblau, Karl & Bähr, Cornelius & Millack, Agnes & van Baal, Sebastian & aus dem Moore, Nils & Korfhage, Thorben, 2015. "Zukunft von Wirtschaft und Gesellschaft unter Minimalwachstumsbedingungen: Begründungsmuster, Folgen, Handlungsoptionen," RWI Projektberichte, RWI - Leibniz-Institut für Wirtschaftsforschung, number 123324.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Geyer, J.; Korfhage, T.;, 2017. "Long-term care reform and the labor supply of informal caregivers – evidence from a quasi-experiment," Health, Econometrics and Data Group (HEDG) Working Papers 17/20, HEDG, c/o Department of Economics, University of York.
    2. Johannes Geyer & Thorben Korfhage, 2018. "Labor supply effects of long‐term care reform in Germany," Health Economics, John Wiley & Sons, Ltd., vol. 27(9), pages 1328-1339, September.
    3. Geyer, Johannes & Haan, Peter & Korfhage, Thorben, 2015. "Indirect fiscal effects of long-term care insurance," Ruhr Economic Papers 584, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Schmitz, Hendrik & Westphal, Matthias, 2017. "Informal care and long-term labor market outcomes," Journal of Health Economics, Elsevier, vol. 56(C), pages 1-18.
    5. Johannes Geyer & Thorben Korfhage, 2015. "Long‐term Care Insurance and Carers' Labor Supply – A Structural Model," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1178-1191, September.
    6. 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).
    7. repec:zbw:rwirep:0515 is not listed on IDEAS
    8. Fischer, Björn & Müller, Kai-Uwe, 2020. "Time to care? The effects of retirement on informal care provision," Journal of Health Economics, Elsevier, vol. 73(C).
    9. Heger, Dörte & Korfhage, Thorben, 2017. "Does the negative effect of caregiving on work persist over time?," Ruhr Economic Papers 703, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    10. Rellstab, Sara & Bakx, Pieter & García-Gómez, Pilar & van Doorslaer, Eddy, 2020. "The kids are alright - labour market effects of unexpected parental hospitalisations in the Netherlands," Journal of Health Economics, Elsevier, vol. 69(C).
    11. Korfhage, Thorben, 2019. "Long-run consequences of informal elderly care and implications of public long-term care insurance," Ruhr Economic Papers 813, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. Annika Meng, 2013. "Informal home care and labor-force participation of household members," Empirical Economics, Springer, vol. 44(2), pages 959-979, April.
    13. Korfhage, Thorben & Fischer-Weckemann, Björn, 2024. "Long-run consequences of informal elderly care and implications of public long-term care insurance," Journal of Health Economics, Elsevier, vol. 96(C).
    14. Yoko Niimi, 2018. "Does providing informal elderly care hasten retirement? Evidence from Japan," Review of Development Economics, Wiley Blackwell, vol. 22(3), pages 1039-1062, August.
    15. Costa-Font, Joan & Vilaplana-Prieto, Cristina, 2023. "Caregiving subsidies and spousal early retirement intentions," Journal of Pension Economics and Finance, Cambridge University Press, vol. 22(4), pages 550-589, October.
    16. Heger, Dörte & Korfhage, Thorben, 2016. "Care choices in Europe: To each according to his needs?," Ruhr Economic Papers 649, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    17. Cristina Vilaplana Prieto & Sergi Jiménez-Martín, 2015. "Unmet needs in formal care: kindling the spark for caregiving behavior," International Journal of Health Economics and Management, Springer, vol. 15(2), pages 153-184, June.
    18. Costa-Font, Joan & Jiménez-Martín, Sergi & Vilaplana-Prieto, Cristina, 2022. "Do Public Caregiving Subsidies and Supports affect the Provision of Care and Transfers?," Journal of Health Economics, Elsevier, vol. 84(C).
    19. Ha Trong Nguyen & Luke B. Connelly, 2017. "The Dynamics of Informal Care Provision in an Australian Household Panel Survey: Previous Work Characteristics and Future Care Provision," The Economic Record, The Economic Society of Australia, vol. 93(302), pages 395-419, September.
    20. Nguyen, Ha Trong & Connelly, Luke Brian, 2014. "The effect of unpaid caregiving intensity on labour force participation: Results from a multinomial endogenous treatment model," Social Science & Medicine, Elsevier, vol. 100(C), pages 115-122.

    More about this item

    Keywords

    Labor supply; long-term care; long-term care insurance; natural experiment; quasi-experiment;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:diw:diwsop:diw_sp785. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Bibliothek (email available below). General contact details of provider: https://edirc.repec.org/data/sodiwde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.