The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study

Olena Nizalova

No 5192, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper focuses on the relationship between wages and supply of informal care to elderly parents. Unlike most of the previous research estimating wage elasticities of informal care supply, this study employs instrumental variable technique to account for the fact that the wage rate is likely to be correlated with omitted variables. Based on the data from the 1998 wave of the Health and Retirement Study, the results show that the wage elasticity of informal care supply is negative and larger in magnitude than has been found previously. The lower bound of this elasticity is estimated to be -1.8 for males and -3.6 for females. Additional findings suggest that the wage elasticity of informal care supply differs by the type of care provided to elderly parents, and that it is larger in magnitude among individuals with siblings and those with independently living parents. The analysis also indicates that the reductions in the informal care constitute about 18% of the labor supply response for men and about 56% of the labor supply response for women, which are not compensated by monetary transfers.

Keywords: informal care supply; wage elasticity; family obligations; labor supply; elderly care (search for similar items in EconPapers)
JEL-codes: J14 J18 J22 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-09
New Economics Papers: this item is included in nep-age and nep-lab
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Published - published in: Southern Economics Journal, 2012, 79 (2), 350-366

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Related works:
Journal Article: The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study (2012)
Working Paper: The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study (2011)
Working Paper: The Wage Elasticity of Informal Care Supply: Evidence from the Health and Retirement Study (2010)
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