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This study explores the impact of informal caregiving on labor market attachment and the financial consequences for caregivers. The findings indicate that caregiving primarily affects female caregivers and leads to a decline in earnings growth, concerns about retiree benefits, and negative impacts on health.
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Caregiving and Work:The Relationship between Labor Market Attachment and Parental Caregiving Sean Fahle SUNY Buffalo and Kathleen McGarry University of California, Los Angeles and NBER We are grateful to the Sloan Foundation and to the SSA through a grant to the University of Michigan for funding
Cost of Caregiving • Depends on who caregivers are • Drawn from those with full-time career jobs / higher opportunity cost of time? • Drawn from those with weaker attachment to the labor force? • Depends on long-term effects • Can caregivers return to employment? • Do they suffer permanent decline in earnings? • Are there long-term financial consequences?
Caregivers are Primarily Female • 70% of child caregivers are daughters • 85% of child-in-law caregivers are daughters-in-law
Outcomes for Caregivers • Concerns about labor supply • Change in labor force participation • Decline in earnings growth • Effect on retiree benefits: Pensions, health insurance • Concerns about own health • Increase in stress and depression • Increase in incidence of high blood pressure • Worse self-reported health • Little change in doctor diagnosed conditions
Data • Sample restrictions: • Original HRS cohort • Observed from 1992 to 2010 • Women only • Living parents or parents-in-law in wave 1 • Not providing care when first observed • 1,557 women or 15,570 person years of data
Question • Did you (or your husband / wife / partner) spend a total of 100 or more hours (since the previous wave / in the last two years) helping your (parents / mother / father) with basic personal activities like dressing, eating, and bathing?” • Follow up questions allow us to identify who helped, who was helped, and the number of hours.
Labor Force Attachment Three approaches • Control for past behavior • Tenure on longest job and experience, measured at first interview • Use Social Security earnings records • Quarters of coverage ages 25-44 • Average quarterly earnings ages 25-44 • Expected PIA • Fixed effect models
Regression Analysis of Caregiving • Examine Prob(care) as a function of: • Standard demographic and economic variables + initial experience, tenure on the longest job • Significant coefficients include: • Experience in 1992 (+) • Number of Sisters (-) • Parental age (+)
Regression Analysisof Caregiving • Examine Prob(care) as a function of: • Standard demographic and economic variables + initial experience, tenure on the longest job • Significant coefficients include: • Experience in 1992 (+) • 10 yrs of experience = 2 ppt increase / 20% • Number of Sisters (-) • Each sister = 10 ppt decline • Parental age (+)
Regression Analysis of Caregiving • Examine Prob(care) as a function of: • Standard demographic and economic variables + initial experience, tenure on the longest job • + covered quarters, avg quarterly earnings • Significant coefficients include: • Tenure on the longest job (+) • Number of sisters (-), sisters-in-law (-) • Parent age (+) • Note: Social Security variables not significant
Regression Analysis of Caregiving • No evidence of negative selection into caregiving with respect to labor market experience • Positive related to tenure / experience • Caregiving depends in large part on need • Older parents • Fewer substitute caregivers
Regression Analysis Caregiving • Separately for parents and parents-in-law • For Parental Caregiving • Experience (+) • Sisters (-) • Parental age (+) • For Parent-in-law Caregiving • Parent-in-law age (+) • Weak evidence that husband’s earnings and household’s financial status matter
Regression Analysis of Working • Prob (working) = function of caregiving • + Standard demographic and economic variables and initial experience, tenure on the longest job • + Social Security variables • Prob (working) in fixed effects • Can’t identify effect of non-varying factors (e.g. sisters, prior experience, schooling…)
Regression Analysis Working • Results of standard variables are as expected: • Age (-) • Schooling (+) • Experience / tenure (+) • Married (-) • Poor health (-) • Social Security measures not significant
Regression Analysis of Working • Results of standard variables are as expected: • Age (-) • Schooling (+) • Experience / tenure (+) • Married (-) • Poor health (-) • Social Security measures not significant • Caregiving measures • Negative and significant effects on employment • Negative (not significant) effects on earnings • Mixed effects on conditional earnings
Long term outcomes • Depends on long-term effects • Can caregivers return to employment? • Do they suffer permanent decline in earnings? • Are there long-term financial consequences?
Regression Analysis of Working 2010 • Prob (working) = function of caregiving • + Standard demographic and economic variables and initial experience, tenure on the longest job • + Social Security variables
Conclusions • Caregivers are not drawn from those with weak attachment to the labor force • Greater experience, tenure, earnings • More schooling • Caregiving has a negative effect on work • Negative on employment and hours • Caregiving has long-term consequences • Less likely to be working years later • Lower earnings
What the Future Holds • Declines in fertility • “Protective Effect” of Sisters • More women working • Greater opportunity cost • Aggregate cost of lost wages could increase • Changes in disease specific mortality • Greater demand for care
Probability of Caregiving • Examine P(care) as a function of: • Demographic and economic variables • Age, race, schooling, marital status, hhwealth, number of siblings, parents, spousal income, spousal employment • + Initial experience, tenure on the longest job
