The dual e¤ect of labour market participation on care provision for elderly parents

This paper focuses on the trade-o¤ between work and informal care among women aged 50 to 65. The existing literature provides heterogeneous results on the e¤ect of labour supply on care provision for elderly parents. In particular, existing empirical studies do not allow to conclude to a negative e¤ect of working on informal care provision whereas the standard microeconomic framework predicts a clear substitution between the two activities. To explain these results, we refer to sociology literature that provides evidence of a positive e¤ect of working on the propensity to provide care. We then propose a reformulation of the traditional microeconomic model and derive two testable implications. Using data from SHARE, a European multidisciplinary database of micro-data on health, socio-economic status and family network, we estimate an endogenous switching model. Our main …nding con…rms the results of the qualitative survey and suggests that the e¤ect of paid work on time devoted to care may be decomposed into (i) a discrete positive e¤ect, in which labour market participation positively a¤ects the propensity to provide care, and (ii) a continuous negative e¤ect, in which each worked hour reduces the time devoted to parental care. Simulations suggest that participation in the labour market reduces involvement in care for an elderly parent only for those working more than 26 hours per week. The overall e¤ect of labour market position is …nally relatively modest and does not appear, among women, as a major determinant of informal care provision. Key words: Long-term care; informal care; labour supply; time allocation; endogenous switching model JEL Classi…cation: C34, I12, J14, J22 Acknowledgements: I would like to warmly thank Agnès Gramain and Jérôme Wittwer, who helped me throughout this work. I am grateful to Marie-Eve Joël, Steven Stern, Bruno Ventelou and François-Charles Wol¤ for their valuable comments and suggestions on previous versions of this paper. *Correspondence to: Institut de Recherche et de Documentation en Economie de la Santé (IRDES), 10 rue de Vauvenargues, 75018 Paris, France. E-mail: [email protected]