Unpaid eldercare and its impact on the US labor supply

Abstract

Globally, the dependency ratio is rising due to increase in aging population. Individuals, especially women are challenged when choosing between participating in the labor market and providing care. Using 2011-2017 American Time Use Survey data for a subsample of individuals aged 25- 61 years, we examine the effect of frequent eldercare provision on labor force participation in the US using bivariate probit instrumental variable approach. Our findings suggest that unpaid eldercare performed frequently reduces labor force participation. Female frequent providers are likely to have lower labor force participation compared to their male counterparts. Robustness and sensitivity checks confirm these findings. 

JEL Classification: J14, J16, J22