Long-term Care Responsibility and its Opportunity Costs

This paper analyzes the relationship between long-term care provision and the average individual wage rate. In addition, the effects of the number of hours spent on caregiving on the probability of employment as well as on the number of hours worked are examined. Data from the Survey of Health, Ageing and Retirement (SHARE) of 2004 and 2006 is used to analyze caregiving effects on the European labor market. Descriptive statistics show a positive correlation between hours of care and the wage rate for those working. In the regression analysis, sample-selection models combined with instrumental-variable estimation are used to estimate the causal effects of hours of care on wages. The results illustrate that care for parents has a large negative impact on the individual's wage rate. Test results show that controlling for sample selection is reasonable. Finally, the probability of employment is only decreased in the female sample. Although the hours worked are not significantly affected.