Who cares for mom and dad? Evidence on informal caregiving and labour supply of mature working-age population in contemporary Europe

Abstract: Population ageing affects most European countries, placing increasing pressure on publicly funded Long Term Care (LTC) systems. Informal care is often seen as a low-cost alternative to formal care services, yet it may induce unwelcome reductions in labour supply. This study presents evidence on the relationship of informal care provision, employment probability, and work hours of mature caregivers in Europe. Data from the Survey of Health, Retirement, and Ageing in Europe (SHARE) for the period 2004-2015 is analysed through Ordinary Least Squares and Two-Stage Least Squares estimation. Findings suggest that informal care provision is associated with a drop in the likelihood of being in paid employment for women in a number of Central and Southern European countries. A positive relationship is found for women in Eastern Europe and certain Northern European countries, as well as Switzerland. For some employed caregivers, a positive association with caregiving and work hours is found. The results are partly in line with previous literature, and differences can be in part attributed to differences in methodology.