Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/180563 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11545
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper uses the wellbeing valuation (WV) approach to estimate and monetize the wellbeing impacts of informal care provision on caregivers. Using nationally representative longitudinal data from the U.K., we address two challenging methodological issues related to the economic valuation of informal care: (i) the endogeneity of informal care; and (ii) the sensitivity of income estimates used in valuation. We address the endogeneity issue by decomposing wellbeing losses into those associated with caring for a relative who had recently suffered a serious accident and those associated with caring for a relative who had not had an accident. We use of the Fixed Effects Filtered (FEF) estimator to enable the permanent income coefficient to be estimated free from individual fixed effects bias. This estimate is used instead of the transient income effect in the calculation of shadow prices of informal care. Our estimates suggest that permanent income would have to increase by approximately £102k per year on average to just compensate for the wellbeing losses from providing informal care.
Subjects: 
informal care
well-being
compensation variations
permanent income
happiness
shadow prices
JEL: 
H8
I18
I31
Document Type: 
Working Paper

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