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Labour supply and informal care responses to health shocks within couples: evidence from the UKHL

Annarita Macchioni Giaquinto (), Andrew Jones (), Nigel Rice and Francesca Zantomio ()
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Annarita Macchioni Giaquinto: Department of Economics, University Of Venice CÃ Foscari; FAO

No 2021:11, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: Shocks to health have been shown to reduce labour supply for the individual affected. Less is known about household self-insurance through a partner's response to a health shock. Previous studies have presented inconclusive empirical evidence on the existence of a health-related `added worker effect'. We use UK longitudinal data to investigate within households both the labour supply and informal care responses of an individual to the event of an acute health shock to their partner. Relying on the unanticipated timing of shocks, we combine coarsened exact matching and entropy balancing algorithms with parametric analysis and exploit lagged outcomes to remove bias from observed confounders and time-invariant unobservables. We find no evidence of a health-related ‘added worker effect'. A significant and sizeable increase in spousal informal care, irrespective of spousal labour market position or household financial status and ability to purchase formal care provision, suggests a substitution to informal care provision, at the expense of time devoted to leisure activities.

Keywords: Health shocks; added worker effect; labour supply; informal care; matching methods; panel data (search for similar items in EconPapers)
JEL-codes: C14 I10 I13 J14 J22 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2021
New Economics Papers: this item is included in nep-eur and nep-ias
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Working Paper: Labour supply and informal care responses to health shocks within couples: evidence from the UKHLS (2021) Downloads
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