Do Couples Self-Insure? The Effect of Informal Care on a Couple's Labor Supply

36 Pages Posted: 8 Nov 2011

See all articles by Norma Coe

Norma Coe

University of Pennsylvania - Perelman School of Medicine

Meghan Skira

University of Georgia

Courtney Van Houtven

Duke University

Date Written: October 31, 2011

Abstract

How does informal care provision to an elderly parent affect the labor supply outcomes of a couple? Previous work examines the relationship between caregiving and the labor market decisions of the care provider, but ignores any labor supply response of the spouse to such decisions. Using data from the Health and Retirement Survey, we examine how informal care provision affects the labor supply of both members of a couple, at both the intensive and extensive margins. Such analysis is especially important for evaluating informal care’s potential effect on retirement timing and household wealth accumulation. We find that providing personal care to an elderly parent reduces a married man’s chance of working by 3.2 percentage points, but providing such care does not affect a married woman’s chance of working. Additionally, male labor force decisions remain inelastic in response to the wife’s caregiving behavior. Working married women do adjust their hours of work in response to caregiving, but in the opposite direction that within-couple insurance would suggest. Instead, the woman increases her work by one hour a week if she is the only care provider, and decreases her work when the husband is the only care provider. When both members of the couple provide informal care these effects cancel out.

Keywords: couples, elderly, labor supply, Health and Retirement Survey

JEL Classification: J26

Suggested Citation

Coe, Norma and Skira, Meghan and Van Houtven, Courtney, Do Couples Self-Insure? The Effect of Informal Care on a Couple's Labor Supply (October 31, 2011). Available at SSRN: https://ssrn.com/abstract=1956005 or http://dx.doi.org/10.2139/ssrn.1956005

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

Courtney Van Houtven

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

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