Lifting the Burden Formal Care of the Elderly and Labor Supply of Adult Children

We use a reform in the federal funding of care for the elderly in Norway to examine the effects of formal care expansion on the labor supply decisions of middle-aged children. We find a consistent and significant negative impact of formal care expansion on insured work absences for the adult daughters of single elderly parents. This effect is particularly strong for daughters with no siblings, who are also more likely to exceed earnings thresholds after the reform. We find no impacts of the reform on daughters’ mobility or parental health, and no effects on adult sons.