Labor Supply when Parents are in Need of Care

Using Norwegian administrative register data, we show that having a lone parent in the terminal stage of life or close to a nursing home admission has a small negative effect on the offspring’s labor supply, both at the extensive and the intensive margins. While the effects at the intensive margin are reversed after the parent is admitted to nursing home or dies, the negative employment effects are not. We provide evidence indicating that labor supply changes around these critical events are primarily driven by income effects related to a realized or forthcoming inheritance and not by care requirements. Given the scale and quality of publicly provided long-term care in Norway, we conclude that while a parent’s need for care does trigger a significant rise in offspring’s (particularly daughters’) short-term absence from work, it does not noticeably affect their overall employment and earnings.