Should I Care or Should I Work? The Impact of Work on Informal Care

This paper provides novel evidence on how a sharp increase in labor force participation among older women affects the provision of informal care to their older parents. Based on data from Understanding Society – The UK Household Longitudinal Study, we use an instrumental variable approach that exploits a unique reform that increased the female State Pension age by up to six years. Our results provide evidence of a trade-off between the intensive margin of work and informal care provided outside the household: an increase of 10 hours of work per week reduces the provision of informal care by 2.1 hours a week, which amounts to roughly £2,100 of yearly care-hours lost. This reduction in caregiving is largest among women working in physically or psychosocially demanding jobs, and “sandwich generation” women who have both a living grandchild and a parent alive. Using data from the English Longitudinal Study of Ageing, we show that older parents whose daughters became ineligible to claim their pensions experienced a significant reduction in the amount of care they receive from their daughters, which was not compensated by an increase in formal care or other sources of support. Our results suggest that policies that increase older workers’ labor supply require changes in long-term care policy that compensate for the loss of informal care.