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

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  • Loken, Katrine Vellesen

    (Norwegian School of Economics)

  • Lundberg, Shelly

    (University of California, Santa Barbara)

  • Riise, Julie

    (University of Bergen)

Abstract

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 effects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Our main finding is a consistent and significant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. This effect 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 effects 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.

Suggested Citation

  • Loken, Katrine Vellesen & Lundberg, Shelly & Riise, Julie, 2014. "Lifting the Burden: State Care of the Elderly and Labor Supply of Adult Children," IZA Discussion Papers 8267, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8267
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    Cited by:

    1. Geyer, Johannes & Korfhage, Thorben, 2015. "Long-term care reform and the labor supply of household members: Evidence from a quasi-experiment," Ruhr Economic Papers 574, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. 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.
    3. 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.
    4. Abrahamsen, Signe A. & Grøtting, Maja Weemes, 2019. "Formal Care of the Elderly and Health Outcomes Among Adult Daughters," Working Papers in Economics 2/19, University of Bergen, Department of Economics.
    5. Andersland, Leroy, 2017. "A Universal Childcare Expansion, Quality, Starting Age, and School Performance," Working Papers in Economics 8/17, University of Bergen, Department of Economics.
    6. Norén, Anna, 2020. "Sick of my parents? Consequences of parental ill health on adult children," Working Paper Series 2020:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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    More about this item

    Keywords

    formal and informal care; elderly; welfare state; women's career;
    All these keywords.

    JEL classification:

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

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