A growing concern in many countries is an aging population and an increase in the number of elderly in need of long-term care (LTC). However, the economic and welfare implications of LTC provision remain relatively understudied. One of the primary factors which complicates welfare analysis is that a bulk of elderly care is provided by family members. Norton (2000) estimates that roughly two-thirds of LTC is provided informally. The pervasiveness of informal care due to cultural or family ties has even limited the development of LTC insurance in economically advanced regions like Europe (Costa-Font, 2010). Hence, in order to understand the full macroeconomic implications of growing LTC demands and the appropriate policy response, it is imperative to explore how households cope with these caregiving needs.
Informal caregiving is a time intensive task and must be met by adjustments along leisure or work margins on the part of the care provider. But do caregivers share the full burden of care with other members of their household? Standard cooperative models of the household suggest the welfare burden of care would be distributed across household members (e.g. husband and wife). However, existing literature shows that caregiving falls disproportionately on women as compared to men.
Miller and Bairoliya (2019) develop and calibrate a simple collective model of intra-household bargaining to analyze the time and resource allocation decisions associated with informal care. The authors show that a decrease in bargaining power increases one’s share of the welfare burden. If bargaining power is endogenously determined by relative earnings, the welfare cost of caregiving can fall disproportionately on a single partner, resulting in a “triple burden” of market work, home production, and caregiving. Labor market rigidities exacerbate the total welfare cost of informal caregiving to the household as well as the unequal distribution of the burden.
The paper will be available December 2019