Caring for Aging Parents: Stratified Effects on Labor Force Participation

Melody Waring, University of Wisconsin-Madison

Long-term care in the United States is overwhelmingly provided by unpaid, informal family caregiving. Demand for care is expected to increase as the elderly population swells from both longer life expectancy and the aging Baby Boomer generation. But the supply of informal care has historically required women who were home, out of the labor force. As women’s labor force participation has swelled and people retire later, the majority of caregivers balance both care responsibilities and employment. What happens, though, when the caregivers cannot afford time off from work? How does the relationship between caregiving and labor force participation vary by socioeconomic status?

Taken together, the three papers of my dissertation will paint a picture of how adult children navigate the labor force in a world where parents are living longer and households have fewer working-age adults out of the labor force. I exploit the rich, longitudinal data of the Panel Study of Income Dynamics (PSID) to contribute to the literature on care and work. I consider several employment outcomes, on the extensive and intensive margin, so I can distinguish between when caregiving is related to leaving the labor force or early retirement and when it is related to decreased (or increased) hours of work. For employed caregivers, I also consider hourly wages, both as an intrinsically important measure and as an important indicator of long-term economic well-being after retirement. I begin with simple descriptive methods to provide a snapshot of the associations between employment and caregiving by socioeconomic status. Then I employ several econometric methods, including an instrumental variable model and structural equation modeling, to generate least-biased estimates of the causal effects of caregiving on employment.