Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/272751 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16124
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We estimate a dynamic structural model of labor supply, retirement, and informal care supply, incorporating labor market frictions and the German tax and benefit system. We find that in the absence of Germany's public long-term insurance scheme, informal elderly care has adverse and persistent effects on labor market outcomes and, thus, negatively affects lifetime earnings and future pension benefits. These consequences of caregiving are heterogeneous and depend on age, previous earnings, and institutional regulations. Policy simulations suggest that public long-term care insurance policies are fiscally costly and induce negative labor market effects. But we also show that they can offset the personal costs of caregiving to a large extent and increase welfare for those providing care, especially for low-income individuals.
Subjects: 
long-term care
informal care
long-term care insurance
labor supply
retirement
pension benefits
dynamic structural model
JEL: 
I18
I38
J14
J22
J26
Document Type: 
Working Paper

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