Martin Halla // Johannes Kepler University Linz, AustriaTo the profile
Health of Elderly Parents and Their Children's Labor SupplyResearch Seminars
The authors of the paper presented in this Mannheim Applied Seminar estimate the impact of parental health on adult children's labor market outcomes. To identify a causal effect, they focus on health shocks which increase care dependency abruptly. Our estimation strategy exploits the variation in the timing of shocks across families. Empirical results based on Austrian administrative data show a significant negative impact on the labor market participation and earnings of children. This effect is more pronounced for daughters, for younger children, and for those living close to their parents. Further analyses suggest informal caregiving as the likely mechanism behind the negative impact of deteriorating parental health on the labor market outcomes of the children. Finally, they find the effect to be muted after restrictions on privately hired foreign care workers were loosened, which sharply increased the availability of formal care in Austria.