The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study
This paper focuses on the relationship between wages and supply of informal care to elderly parents. Unlike most of the previous research estimating wage elasticities of informal care supply, this study employs instrumental variable technique to account for the fact that the wage rate is likely to be correlated with omitted variables. Based on the data from the 1998 wave of the Health and Retirement Study, the results show that the wage elasticity of informal care supply is negative and larger in magnitude than has been found previously. The lower bound of this elasticity is estimated to be -1.8 for males and -3.6 for females. Additional findings suggest that the wage elasticity of informal care supply differs by the type of care provided to elderly parents, and that it is larger in magnitude among individuals with siblings and those with independently living parents. The analysis also indicates that the reductions in the informal care constitute about 18% of the labor supply response for men and about 56% of the labor supply response for women, which are not compensated by monetary transfers.
|Date of creation:||Sep 2010|
|Date of revision:|
|Publication status:||published in: Southern Economics Journal, 2012, 79 (2), 350-366.|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier.
- Kenneth Couch & Mary Daly & Douglas Wolf, 1999. "Time? money? both? the allocation of resources to older Parents," Demography, Springer, vol. 36(2), pages 219-232, May.
- Mroz, Thomas A, 1987.
"The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions,"
Econometric Society, vol. 55(4), pages 765-99, July.
- Thomas Mroz, . "The Sensitivity of an Empirical Model of Married Women's Hours of Work to Economic and Statistical Assumptions," University of Chicago - Population Research Center 84-8, Chicago - Population Research Center.
- Casey B. Mulligan, . "The Intertemporal Substitution of Work--What Does the Evidence Say?," University of Chicago - Population Research Center 95-11, Chicago - Population Research Center.
- Meta Brown, 2006. "Informal Care and the Division of End-of-Life Transfers," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
- Schokkaert, Erik, 2006. "The Empirical Analysis of Transfer Motives," Handbook on the Economics of Giving, Reciprocity and Altruism, Elsevier.
- Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102 Elsevier.
- Julie Zissimopoulos, 2001. "Resource Transfers to the Elderly: Do Adult Children Substitute Financial Transfers for Time Transfers?," Working Papers 01-05, RAND Corporation Publications Department.
- Leora Friedberg, 2000.
"The Labor Supply Effects of the Social Security Earnings Test,"
The Review of Economics and Statistics,
MIT Press, vol. 82(1), pages 48-63, February.
- Leora Friedberg, 1999. "The Labor Supply Effects of the Social Security Earnings Test," NBER Working Papers 7200, National Bureau of Economic Research, Inc.
- Yannis M. Ioannides & Kambon Kan, 1999.
"The Nature of Two-Directional Intergenerational Transfers of Money and Time: An Empirical Analysis,"
Discussion Papers Series, Department of Economics, Tufts University
9917, Department of Economics, Tufts University.
- IOANNIDES , Yannis & KAN , Kamhon, 1994. "The Nature of Two-Direction Intergenerational Transfers of Money and Time : An Empirical Analysis," CORE Discussion Papers 1994033, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Jonathan Gruber & Peter Orszag, 1999. "What To Do About The Social Security Earnings Test?," Issues in Brief ib-1, Center for Retirement Research.
- Frank A. Sloan & Jingshu Wang & Harold H. Zhang, 2002.
"Upstream Intergenerational Transfers,"
Southern Economic Journal,
Southern Economic Association, vol. 69(2), pages 363-380, October.
- Sloan, Frank A & Picone, Gabriel & Hoerger, Thomas J, 1997.
"The Supply of Children's Time to Disabled Elderly Parents,"
Western Economic Association International, vol. 35(2), pages 295-308, April.
- Sloan, Frank & Gabriel Picone & Thomas J. Hoerger, 1995. "The Supply of Children's Time to Disabled Elderly Parents," Working Papers 95-46, Duke University, Department of Economics.
- Van Houtven, Courtney Harold & Norton, Edward C., 2004. "Informal care and health care use of older adults," Journal of Health Economics, Elsevier, vol. 23(6), pages 1159-1180, November.
- John Pencavel, 2002. "A Cohort Analysis of the Association between Work Hours and Wages among Men," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 251-274.
- Baker, Michael & Benjamin, Dwayne, 1999. "How do retirement tests affect the labour supply of older men?," Journal of Public Economics, Elsevier, vol. 71(1), pages 27-51, January.
- Steven J. Haider & David S. Loughran, 2008. "The Effect of the Social Security Earnings Test on Male Labor Supply: New Evidence from Survey and Administrative Data," Journal of Human Resources, University of Wisconsin Press, vol. 43(1).
- Courtney C. Coile, 2004. "Health Shocks and Couples' Labor Supply Decisions," NBER Working Papers 10810, National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp5192. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.