Job Market Paper
Abstract: This paper studies the factors that determine families' decisions to provide formal and informal care across Europe. To explain the observed patterns of care provision and labor force participation of children of care recipients, I model the behavior of family members when making care and employment choices as a static, non-cooperative game of complete information. I estimate this model separately for Northern, Central, and Southern European countries, using data from the Survey of Health, Aging and Retirement in Europe. First, I use the model to carry out a decomposition analysis of the forces behind cross-country differences in formal and informal care use. Next, I evaluate several types of subsidies for care recipients and informal caregivers to reduce the high percentage of old parents who do not receive any care, and the large gap in terms of employment between the children who do not give care and those who do in Southern Europe. I find that subsidies for formal care recipients constitute an attractive policy tool to meet elderly care needs in Southern Europe, while informal care subsidies can also mitigate the gaps in labor force participation between the children who provide care to parents and those who do not.
Abstract: This paper studies the effect of the provision of care for elderly parents on labor supply decisions in Europe. Using data from the Survey of Health, Ageing and Retirement in Europe (SHARE), first I provide an overview of care provision and employment across the continent. In the second place, I estimate the effect of care provision on employment and hours worked through several reduced-form specifications. The results point out that, if any, caring for parents has a negative, small impact on the propensity to being employed and the number of hours worked. Next, I build and estimate a static, structural model which characterizes the trade-offs in terms of time allocation and care arrangements faced by a working-age individual with an elderly parent. I use the estimated model to simulate the decisions of individuals in my sample in several counterfactual scenarios where I remove differences across countries, and highlight the role of wages and prices of formal care to understand the observed patterns. Finally, I evaluate the effects of two policies in support of elderly care and discuss how these vary among the countries considered.