New Evidence on Employment Effects of Informal Care Provision in Europe.

OBJECTIVE: To estimate how labor force participation is affected when adult children provide informal care to their parents.

DATA SOURCE: Survey of Health, Ageing and Retirement in Europe from 2004 to 2013.

STUDY DESIGN: To offset the problem of endogeneity, we exploit the availability of other potential caregivers within the family as predictors of the probability to provide care for a dependent parent. Contrary to most previous studies, the dataset covers the whole working-age population in the majority of European countries. Individuals explicitly had to opt for or against the provision of care to their care-dependent parents, which allows us to more precisely estimate the effect of caregiving on labor force participation.

PRINCIPAL FINDINGS: Results reveal a negative causal effect that indicates that informal care provision reduces labor force participation by 14.0 percentage points (95 percent CI: -0.307, 0.026). Point estimates suggest that the effect is larger for men; however, this gender difference is not significantly different from zero at conventional levels.

CONCLUSIONS: Results apply to individuals whose consideration in long-term care policy is highly relevant, that is, children whose willingness to provide informal care to their parents is altered by available alternatives of family caregivers.