Ruhr Economic Papers

Ruhr Economic Papers #646

Informal Care and Long-term Labor Market Outcomes

by Hendrik Schmitz and Matthias Westphal

RGS, RWI, UDE, 10/2016, 52 S./p., 8 Euro, ISBN 978-3-86788-752-6 DOI: 10.4419/86788752



In this paper we estimate the long-run effects of informal care provision on female caregivers’ labor market outcomes up to eight years after care provision. We compare a static version, where the average effects of care provision in a certain year on later labor market outcomes are estimated, to a partly dynamic version where the effects of up to three consecutive years of care provision are analyzed. Our results suggest that there are significant initial negative effects of informal care provision on the probability to work full time. The reduction in the probability to work full time by 4 percentage points (or 2.4 to 5.0 if we move from point to partial identification) is persistent over time. Effects on the probability of being in the labor force are quite small, however high care intensity strongly reduces the probability to be in the labor force eight years after the start of the episode. Short-run effects on hourly wages are zero but we find considerable long-run wage penalties.

JEL-Classification: I10, I18, C21, J14,

Keywords: Informal care; labor supply; inverse probability weighting; dynamic sequential models