The employment costs of caregiving in Norway
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The employment costs of caregiving in Norway Andreas Kotsadam
Received: 2 August 2011 / Accepted: 4 September 2012 / Published online: 16 September 2012 © Springer Science+Business Media New York 2012
Abstract Informal eldercare is an important pillar of modern welfare states and the ongoing demographic transition increases the demand for it while social trends reduce the supply. Substantial opportunity costs of informal eldercare in terms of forgone labor opportunities have been identified, yet the effects seem to differ substantially across states and there is a controversy on the effects in the Nordic welfare states. In this study, the effects of informal care on the probability of being employed, the number of hours worked, and wages in Norway are analyzed using data from the Life cOurse, Generation, and Gender survey. New and previously suggested instrumental variables are used to control for the potential endogeneity existing between informal care and employment-related outcomes. In total, being an informal caregiver in Norway is found to entail substantially less costs in terms of forgone formal employment opportunities than in non-Nordic welfare states. Keywords
Informal care · Female labor supply · European welfare states
JEL Classification
I11 · I12 · J22
Introduction Long-term care is, in all modern societies, some form of shared responsibility between the family and the welfare state, with supportive efforts from other parties, such as friends, neighbors, and volunteers (WHO 2002). OECD (2005) estimates that around 80 % of care to frail elderly is provided informally by friends or family. Population aging is likely to increase the demand for care, and welfare state retrenchment is likely to imply a lower share of publicly
A. Kotsadam (B) Norwegian Social Research, Elisenberg, P.O. Box 3223, Oslo 0208, Norway e-mail: [email protected] A. Kotsadam Department of Economics, The University of Gothenburg, Box 640, SE-405 30 Gothenburg, Sweden
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provided care. These trends are combined with social trends (such as lower marriage rates, fewer children, less intergenerational co-residence, and increased geographical mobility) which reduce the viability of informal care (Heitmueller 2007). Most developed nations also try to increase paid employment, especially for women and older workers, who also bear the lion’s share of informal caring responsibilities (Michaud et al. 2010). Understanding the costs of caregiving on employment outcomes is therefore important for the viability of informal care and for ensuring that eldercare policies do not counteract other societal goals. The previous evidence on the effects of informal care on employment outcomes is mixed, and institutional context seems to be important. Most of the existing studies on the relationship between informal care and employment-related outcomes have been carried out in the US (e.g., Wolf and Soldo 1994; Ettner 1996; Pavalko and Artis 2003; Johnson and Lo Sasso 2000) and the UK (Heitmueller 2007; Heitmueller and Inglis 2004, 2007;
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