The Effect of Caring for Older Family Members on Younger Individuals’ Labor Market Outcomes

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This paper reports estimates of the effects of caregiving for older family members on measures of labor supply of younger family members. Cost-of-illness studies have generally focused only on the primary caregiver and used non-representative data. This research estimates the labor market consequences for all family members of co-residing older persons using a large, nationally representative data set. The findings provide a fuller picture of the economic costs of dementia for the family. The effects of caregiving are estimated for labor force participation, employment, and full-time work. We estimate these effects in pooled and panel data models of binary choice with endogenous regressors using nineteen years of data from the Medical Expenditure Panel Survey. For both our pooled and panel analyses, the censored regression estimates indicate that providing an older family member with ADL assistance has a significant negative impact on the labor force participation of younger family members. The findings from the censored regressor model for employment and full-time employment require further analysis. These preliminary findings suggest that the need for ADL help among older family members has important effects on the labor market outcomes of younger co-residing family members.

Western Economic Association Conference Meetings 2017 Meetings, San Diego, CA, USA

Presented at

  • Western Economic Association, San Diego, CA [June 2017].
  • Midwest Economics Association, Evanston, IL [March 2016].

JEL codes: J2 . I1