Does Labor Force Participation Reduce Informal Caregiving?

41 Pages Posted: 12 Jul 2013 Last revised: 10 Aug 2013

See all articles by Daifeng He

Daifeng He

College of William and Mary

Peter McHenry

College of William and Mary

Date Written: August 8, 2013

Abstract

This paper examines the causal impact of labor force participation on informal caregiving. To address the endogeneity of labor force participation, we exploit local business cycles and instrument for individual labor force participation with state unemployment rates. Using data from the Survey of Income and Program Participation (SIPP), we find that labor force participation significantly reduces informal caregiving. Among women, working an additional 10 hours per week reduces the probability of providing informal care by 12.5 percentage points and reduces the number of care hours by 32 percent. We also find that the effect of labor force participation is stronger among women with low income and wealth, who are the most important target of many welfare policies that promote labor force participation. Our results imply that demographic trends and work-promoting policies have the unintended consequence of reducing informal caregiving in an aging society that faces rising demand for informal care.

Keywords: informal care, elderly care, employment, labor force participation, local business cycle, state unemployment rate

JEL Classification: I1, J14, J22

Suggested Citation

He, Daifeng and McHenry, Peter, Does Labor Force Participation Reduce Informal Caregiving? (August 8, 2013). Available at SSRN: https://ssrn.com/abstract=2292700 or http://dx.doi.org/10.2139/ssrn.2292700

Daifeng He (Contact Author)

College of William and Mary ( email )

P.O. Box 8795
Williamsburg, VA 23185
United States

HOME PAGE: http://wmpeople.wm.edu/dhe

Peter McHenry

College of William and Mary ( email )

United States

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