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.