Effect of Informal Care on Work, Wages, and Wealth

Boston College Center for Retirement Research Working Paper No. 2010-23

43 Pages Posted: 14 Dec 2010

See all articles by Courtney Van Houtven

Courtney Van Houtven

Duke University

Norma Coe

University of Pennsylvania - Perelman School of Medicine

Meghan Skira

University of Georgia

Date Written: December 1, 2010

Abstract

Cross-sectional evidence in the United States finds that informal caregivers have less attachment to the labor force, measured both by the number of hours worked and labor force participation. The causal mechanism is unclear: do children who work less become informal caregivers, or are children who become caregivers working less? Using longitudinal data from the Health and Retirement Study (HRS), this project identifies the relationship between informal care and labor force participation in the United States, both on the intensive and extensive margins, and whether there are wage penalties from informal care. We use our results to examine retirement wealth effects, in particular, changes in Social Security benefits. In our approach we carefully test for endogeneity; control for time invariant individual heterogeneity; and, lastly, explore the effects across key domains of behavior for men and women – stage and duration of care. We find that there are modest decreases – around 2 percentage points – in the likelihood of being in the labor force for caregivers. We find that female caregivers who have longer spells face significant but modest risks of not working, that the negative effect on work for male caregivers occurs right away, and that both male and female caregivers who have ended caregiving are not significantly more likely to work. In addition, wage penalties exist for female caregivers and wage premiums exist for male caregivers. There are minimal expected changes to caregivers’ future Social Security benefits. Finally, despite strong instruments, there is no evidence of endogeneity between informal care and work, suggesting that controlling for individual heterogeneity with fixed effects is a sufficient approach in longitudinal inquiries of informal care’s effect on work and wealth.

Suggested Citation

Van Houtven, Courtney and Coe, Norma and Skira, Meghan, Effect of Informal Care on Work, Wages, and Wealth (December 1, 2010). Boston College Center for Retirement Research Working Paper No. 2010-23. Available at SSRN: https://ssrn.com/abstract=1724770 or http://dx.doi.org/10.2139/ssrn.1724770

Courtney Van Houtven

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Norma Coe (Contact Author)

University of Pennsylvania - Perelman School of Medicine ( email )

423 Guardian Drive
Philadelphia, PA 19104
United States

Meghan Skira

University of Georgia ( email )

Athens, GA 30602-6254
United States

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