Abstract

A large fraction of the long-term care services demanded by the elderly who exhibit limitations in their daily life, is provided by adult children (see e.g. Kalwij, Pasini, Wu, 2011 for recent evidence based on SHARE data). Understanding the determinants of care provision by adult children is of paramount importance from a public policy point of view: longterm care provision can have an important and negative impact on caregivers’ labour market participation and career prospects, especially for women. Adult children might provide care to their parents either because of pure altruism, or because they are compensated by their parents either financially or through in-kind services. The latter motivation has been discussed in the literature on exchange motives for bequest initiated by Bernheim et al (1985) and Cox (1987). Using SHARE data, Alessie, Angelini, Pasini (2009) show that as regards long term care and inter-vivos financial transfers, both mechanisms are in place.

Parents can compensate their children also providing services themselves: in this paper we want to investigate whether parents who have provided help, while in good health, by taking care of their grandchildren, will later receive more informal care from their children, once experiencing the onset of limitations in performing activities of daily living. The compression of morbidity occurred in recent decades across Europe increased the number of grandparents in good health conditions, who can help their adult children by providing childcare, thus reducing the costs associated to fertility decisions. To the extent that grandparents’ help is later reciprocated by their children (providing informal care once parents’ care needs arise), informal care provision might decrease the fiscal cost of public long term care expenditure programmes, and as such represents a highly relevant policy subject. This paper will take full advantage of the panel dimension of SHARE data (Survey on Health, Ageing and Retirement in Europe).

The key idea is to investigate whether provision of informal childcare by grandparents at some point in time has a causal impact on the prevalence and intensity of informal care they will later receive, once needing care to perform activities of daily living, from adult children. The objects of our investigation are both a binary variable for receipt of informal care provided by children, and the number of hours of care received from all children, distinguishing each child. The main determinants of interest are the prevalence and time devoted to grandchildren’ childcare. Other controls include socio-demographic characteristics of respondents (grandparents), their number of reported ADL/IADL limitations and their children characteristics. From the analysis of informal care received by grandparents, as observed in wave 2 of the survey, we find that the marginal effect of having previously provided childcare to grandchildren is highly significant and indicates an important increase in the likelihood of informal care receipt from children, from its baseline value.

Slides