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The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study

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  • Nizalova, Olena Y.

    () (University of Kent)

Abstract

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.

Suggested Citation

  • Nizalova, Olena Y., 2010. "The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study," IZA Discussion Papers 5192, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp5192
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    Cited by:

    1. Edwin van Gameren & Durfari Velandia Naranjo, 2015. "Working and Caring: The Simultaneous Decision of Labor Force Participation and Informal Elderly and Child Support Activities in Mexico," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 52(2), pages 117-148, November.
    2. Kanika Arora & Douglas Wolf, 2014. "Is There a Trade-off Between Parent Care and Self-care?," Demography, Springer;Population Association of America (PAA), vol. 51(4), pages 1251-1270, August.
    3. Fischer, Björn & Müller, Kai-Uwe, 2020. "Time to care? The effects of retirement on informal care provision," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics.
    4. Russell, Helen & Grotti, Raffaele & McGinnity, Fran & Privalko, Ivan, 2019. "Caring and unpaid work in Ireland," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT382, November.
    5. Daifeng He & Peter McHenry, 2016. "Does Formal Employment Reduce Informal Caregiving?," Health Economics, John Wiley & Sons, Ltd., vol. 25(7), pages 829-843, July.
    6. Björn Fischer & Kai-Uwe Müller, 2019. "Time to Care? The Effects of Retirement on Informal Care Provision," Discussion Papers of DIW Berlin 1809, DIW Berlin, German Institute for Economic Research.
    7. 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).

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    More about this item

    Keywords

    informal care supply; wage elasticity; family obligations; labor supply; elderly care;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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