The Economics of Informal Care

Abstract

Across the globe, the most common means of supporting older disabled adults in their homes is through “informal care.” An informal carer is a family member or friend, including children or adults, who help another person because of their illness, frailty, or disability. There is a rich economics literature on the direct benefits of caregiving, including allowing the care recipient to remain at home for longer than if there was no informal care provided. There is also a growing literature outlining the associated costs of care provision. Although informal care helps individuals with disabilities to remain at home and is rewarding to many carers, there are often negative effects such as depression and lost labor market earnings that may offset some of these rewards. Economists have taken several approaches to quantify the net societal benefit of informal care that consider the degree of choice in caregiving decisions and all direct and indirect benefits and costs of informal care.

Unpaid Caregiving and Labour Force Participation among Chinese Middle-aged Adults

“…Probit regression analysis was performed for women and men separately to estimate the association between weekly caregiving hours and LFP. In each analysis, we investigated a potential threshold of caregiving hours by entering three independent caregiving hours-related variables into the probit model as recently proposed by Van Houtzen and colleagues [8]: (1) a continuous variable representing caregiving hours, CG; (2) a dummy variable that indicated whether caregiving hours exceeded a threshold, CG^; and (3) an interaction term between caregiving hours and the threshold dummy variable, CG*CG^. Each of the three estimated coefficients on these caregiving variables reflect the incremental change in the likelihood of LFP due to a unit increase in caregiving hours, an abrupt discontinuity in the relationship between caregiving and LFP at the caregiving threshold, and potential change to the incremental effect of caregiving on LFP when caregiving hours exceed the threshold.…”

“…Recent work by Van Houtven and colleagues [8] advances the theory by examining the theoretical basis for a caregiving hours threshold. This work assesses labour-leisure preference orderings in which the marginal rate of substitution may change abruptly if leisure time were below some minimum.…”

“…The relationship between the intensity of unpaid caregiving and the probability of labour force participation (LFP) has been studied extensively in the international literature. A consensus has emerged from these studies which suggests that LFP is generally inversely related to more intensive caregiving and that there exists a caregiving threshold beyond which increased caregiving has a larger negative effect on LFP than before that threshold [8]. What remains unclear from the literature is the exact form of such caregiving thresholds, specifically if they constitute kinks in and/or discontinuities to the relationship between caregiving and LFP.…”

“…Meanwhile, several studies have estimated kinks by testing a set of rather arbitrary thresholds (10,15, and 20 hours per week), but they did not assess potential discontinuities at these thresholds [15,16]. To date no study has simultaneously examined both kinks and discontinuities associated with the relationship between LFP and unpaid caregiving; indeed, neither term ("kink" nor "discontinuity") was specifically mentioned in the referenced articles [8].…”

Beyond the definition of formal care: Informal care arrangements among older swedes who are not family

“…From a health system perspective, informal care is often understood as unpaid care carried out by family, friends and others that complements or replaces formal care (Houtven, Carmichael, Jacobs, & Coyte, ). This view shapes the understanding of both tasks and roles related to informal care (Dahlberg, ; Jegermalm & Sundström, ) and focuses on its utility functions rather than its social construction or culturall embeddedness (Folbre, ).…”