Intergenerational Labor Market and Welfare Consequences of Poor Health

Thomas Kniesner and Anthony LoSasso

No 37, Center for Policy Research Working Papers from Center for Policy Research, Maxwell School, Syracuse University

Abstract: Fall 2001 (Revised from March 2001). Abstract: Our research provides new econometric evidence concerning partial economic risk sharing between a frail elderly parent and an adult child. We estimate a jointly determined limited dependent variables system explaining the parent’s entry into a nursing home, the adult child’s visits to the parent, and the adult child’s labor supplied. The time allocation of adult sons is unaffected by a parent’s frail health. Adult daughters who visit a frail elderly parent daily decrease their annual labor supplied by about 1,000 hours annually, largely through labor force non-participation. The implied welfare loss to the daughter from a frail elderly parent in need of frequent visits is about $180,000. Our results run counter to the moral hazard argument against long-term care insurance and clarify the two sides’ positions in the policy debate over the degree of generosity of recently proposed tax credits for adult children who help care for sick aged parents.

JEL-codes: I10 J14 J62 (search for similar items in EconPapers)
Date: 2001-03
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:max:cprwps:37

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