Intergenerational Labor Market and Welfare Consequences of Poor Health

Posted: 16 Apr 2011

See all articles by Thomas J. Kniesner

Thomas J. Kniesner

Claremont Graduate University - Department of Economic Sciences; Syracuse University - Department of Economics; IZA

Anthony T. Lo Sasso

University of Illinois at Chicago - School of Public Health

Date Written: Fall 2001

Abstract

Our research provides new econometric evidence concerning partial economic risk sharing between a frail elderly parent and an adult child. We estimate a jointly determined limited dependent variables system explaining the parent’s entry into a nursing home, the adult child’s visits to the parent, and the adult child’s labor supplied. The time allocation of adult sons is unaffected by a parent’s frail health. Adult daughters who visit a frail elderly parent daily decrease their annual labor supplied by about 1,000 hours annually, largely through labor force non-participation. The implied welfare loss to the daughter from a frail elderly parent in need of frequent visits is about $180,000. Our results run counter to the moral hazard argument against long-term care insurance and clarify the two sides’ positions in the policy debate over the degree of generosity of recently proposed tax credits for adult children who help care for sick aged parents.

JEL Classification: I10, J14, J62

Suggested Citation

Kniesner, Thomas J. and Lo Sasso, Anthony T., Intergenerational Labor Market and Welfare Consequences of Poor Health (Fall 2001). Research in Labor Economics, Vol. 20, 2001, Available at SSRN: https://ssrn.com/abstract=1809069

Thomas J. Kniesner (Contact Author)

Claremont Graduate University - Department of Economic Sciences ( email )

Claremont, CA 91711
United States

Syracuse University - Department of Economics ( email )

Syracuse, NY 13244-1020
United States

IZA

P.O. Box 7240
Bonn, D-53072
Germany

Anthony T. Lo Sasso

University of Illinois at Chicago - School of Public Health ( email )

1603 West Taylor Street
Chicago, IL 60612
United States

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