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Lifting the Burden: State Care of the Elderly and Labor Supply of Adult Children

In this paper, we use a 1998 reform in the federal funding of local home-based care for the elderly in Norway to examine the eff ects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Our main finding is a consistent and signi cant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. This eff ect is particularly strong for daughters with no siblings, and this group is also more likely to exceed earnings thresholds after the reform. We find no impacts of the reform on daughter's mobility or parental health, and no e ffects on adult sons. Our results provide evidence of substitution between formal home-based care and informal care for the group that is most likely to respond to the parent's need for care - adult daughters with no siblings to share the burden of parental care. These results also highlight the importance of labor market institutions that provide flexibility in enabling women to balance home and work responsibilities.

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Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 03/14.

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Length: 46 pages
Date of creation: 24 Jun 2014
Date of revision:
Handle: RePEc:hhs:bergec:2014_003
Contact details of provider: Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
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  1. Claudia Goldin, 2014. "A Grand Gender Convergence: Its Last Chapter," American Economic Review, American Economic Association, vol. 104(4), pages 1091-1119, April.
  2. Markussen, Simen & Røed, Knut & Røgeberg, Ole J. & Gaure, Simen, 2009. "The Anatomy of Absenteeism," IZA Discussion Papers 4240, Institute for the Study of Labor (IZA).
  3. Peter C. Coyte & Mark Stabile, 2001. "Household Responses to Public Home Care Programs," NBER Working Papers 8523, National Bureau of Economic Research, Inc.
  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 & 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.
  6. Adriaan Kalwij & Giacomo Pasini & Mingqin Wu, 2014. "Home care for the elderly: the role of relatives, friends and neighbors," Review of Economics of the Household, Springer, vol. 12(2), pages 379-404, June.
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