More than 40% of the respondents in the UK British Household Panel Survey provide informal care to a relative at least for
one year within the period 1991-2003 and carers are usually less likely to hold simultaneously a paid job. There is little
evidence on the mechanism that links informal care provision and labour market outcomes. This paper provides evidence on the pathways
through which this pattern arises using a multivariate dynamic panel data model that accounts for state-dependence, feedback effects
and correlated unobserved heterogeneity. We find evidence of a causal link from informal care to employment with employment rates
reduced by up to 5 percent following engagement in care. However, this effect is only found for co-residential carers who account
for one third of the population of carers and less than 5 percent of the overall labor force. For the same group, a significantly
smaller link from employment to care provision is found. A micro-simulation exercise using the model estimates suggest that the
overall potential pressure on the provision of informal care created by a rise in the employment rate is minimal and similarly
for the employment effects of a rise in the provision of informal care. However, our results suggest that targeted interventions
towards carers most affected (e.g. co-residential carers) could perhaps ease up the employment disincentives these workers face.
Presented by:
Axel Heitmueller (DWP and IZA) (joint with Pierre-Carl Michaud)
Date & time:
February 6, 2006 4:00 pm - February 6, 2006 12:00 am
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