Lifting the Burden: State Care of the Elderly and Labor Supply of Adult Children

The Impacts of Free Universal Elderly Care on the Supply of Informal Care and Labour Supply*

“…However, the evidence on our precise question of whether public financial support for elderly care affects the level of labour supply is scarce. An important exception is Løken, Lundberg and Riise (2016), which uses the 1998 federal grant program in Norway that increased the amount of home care provision in selected municipalities. That paper finds that the policy drove statistically significant, and relatively large, reductions in the incidence of sickness absence, and days of sickness absence, even though there was no significant effect on the probability of working.…”

Formal care of the elderly and health outcomes among adult daughters

“…16 The data report only the number of individuals who receive care, not the amount of care each individual receives. 17 This specification is very close to that of Løken et al (2017).…”

“…The main strength of this study is the application of extremely rich register panel data in combination with an exogenous increase in formal care, and the assessment of long term health effects, all of which are limitations in the literature. Although the study by Løken et al (2017) share some of the data and outcomes and were the first to apply the reform to analyze formal care expansion, this study have access to better data to study this problem (such as all sickness absence spells, including short spells, diagnoses on the sickness absence, and long term health outcomes). This enables us to explore the important question of whether reduced sickness absence is caused by improved health or if other factors, such as time constraints or work flexibility are likely drivers of this result.…”

“…Finally, poor relations to the labor market may also be related to poor health in itself, which may further bias results obtained by comparing individuals with different levels of care responsibilities. Løken et al (2017) avoid the endogeneity problem by exploiting a reform introduced in 1998 which aimed at equalizing the availability of care services across Norwegian municipalities. This reform led to an arguably exogenous regional variation in the expansion of formal care services, enabling the estimation of causal effects of increased formal care by comparing outcomes across municipalities with different levels of formal care expansions.…”

“…Sickness absence has been shown to be used as a means to insure employees against a broad range of circumstances, besides own illness (Carlsen, 2008;Gautun, 2008;Markussen et al, 2011), and employees with care responsibilities are more likely to prefer reduced or flexible working hours compared to other workers (Gautun & Hagen, 2010). In this analysis, we explore whether increased formal care has an effect on caregiver's health or if the result by Løken et al (2017) can be explained by time constraints and a reduced need for work flexibility. Specifically, we apply difference-in-differences models and compare short and long-term health and healthcare utilization outcomes for daughters with parents living in municipalities with different levels of formal care expansions.…”