Effect of Informal Care on Work, Wages, and Wealth

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Adult children are the most common type of informal care providers for their parents. Given that a typical adult child caregiver is in his or her late fifties or early 60s, the effect of caregiving on labor market decisions is an important policy issue. Current cross-sectional work in this area finds that that informal caregivers have less attachment to the labor force, measured both by the number of hours worked and labor force participation. Yet the causal mechanism remains unclear: do children who work less become informal caregivers, or are children who become caregivers working less?nUsing longitudinal data from the Health and Retirement Study (HRS), this project identifies the relationship between informal care and labor force participation in the U.S., both on the intensive and extensive margins, and whether wages decline as a result of informal care. We find that caregiving causes modest decreases – around two percentage points – in the likelihood of being in the labor force. The negative effect on work for male caregivers occurs immediately, while caregiving only impacts females with longer caregiving spells. Working female caregivers face wage penalties. Neither male nor female caregivers who have ended caregiving are significantly more likely to work than their non-caregiver counterparts. However, long-term wealth impacts due to the estimated changes in caregivers' labor force participation are minimal, as measured by expected future Social Security benefits.