Time to Care? The Effects of Retirement on Informal Care Provision

46 Pages Posted: 10 Jul 2019

See all articles by Kai-Uwe Müller

Kai-Uwe Müller

German Institute for Economic Research (DIW Berlin)

Björn Fischer

European Central Bank (ECB)

Date Written: July 2019

Abstract

This paper analyzes the impact of a reduction in women's labor supply through retirement on their informal care provision. Using SOEP data from the years 2001- 2016 the analysis addresses fundamental endogeneity problems by applying a fuzzy regression discontinuity design. We exploit early retirement thresholds for women in the German pension system as instruments for their retirement decision. We find significant positive effects on informal care provided by women retiring from employment at the intensive and extensive margin that are robust to various sensitivity checks. Women retiring from full-time employment, highly educated women and women providing care within the household react slightly stronger. Findings are consistent with previous evidence and underlying behavioral mechanisms. They point to a time-conflict between labor supply and informal care before retirement. Policy implications are far-reaching in light of population aging. Prevalent pension reforms that aim to increase life-cycle labor supply threaten to reduce informal care provision by women and to aggravate the existing excess demand for informal care.

Keywords: retirement, informal care, regression discontinuity, age threshold

JEL Classification: J22, J13, H43

Suggested Citation

Müller, Kai-Uwe and Fischer, Björn, Time to Care? The Effects of Retirement on Informal Care Provision (July 2019). DIW Berlin Discussion Paper No. 1809, 2019. Available at SSRN: https://ssrn.com/abstract=3417585 or http://dx.doi.org/10.2139/ssrn.3417585

Kai-Uwe Müller (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Björn Fischer

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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