Short- and Medium-Term Effects of Informal Eldercare on Labor Market Outcomes

Abstract

Informal caregivers, often family members, provide valuable services to elderly persons with long-term care needs. However, the time commitment of caregiving often competes against time spent in the labor force. In addition to the momentary trade-off, long-term consequences are possible since older workers in particular might find it difficult to reenter the labor market after a period of caregiving. While several studies document a negative relationship between caregiving and paid work, little is known about whether this effect persists over time. Analyzing a large panel data set of fifteen European countries and Israel, this study shows that care provision for an elderly parent has negative effects on employment rates and paid working hours for both men and women. While men are more likely to drop out of the labor force, especially in response to continuous caregiving, women, on average, also reduce their paid working hours. HIGHLIGHTS Adults who provide informal unpaid care for aging parents may struggle to maintain full-time paid employment. In aging societies the problem will become acute, as mature workers who leave paid jobs for caregiving risk future financial challenges. Short-term caregiving reduces both men’s and women’s probabilities of paid employment; longer-term caregiving has labor market outcomes that reflect traditional gender roles. Policymakers could reduce financial risks for informal caregivers by encouraging work flexibility, instituting paid leaves, and facilitating return to full-time paid work after stints of part-time employment.