Labour supply and informal care responses to health shocks within couples: evidence from the UKHLS

Annarita MacChioni Giaquinto; Andrew Michael Jones; Nigel Rice; Francesca Zantomio

Labour supply and informal care responses to health shocks within couples: evidence from the UKHLS

Annarita MacChioni Giaquinto, Andrew Michael Jones, Nigel Rice, Francesca Zantomio

Research output: Working paper

Abstract

Shocks to health have been shown to reduce labour supply for the individual affected. Less is known about household self-insurance through a partner’s response to a health shock. Previous studies have presented inconclusive empirical evidence on the existence of a health-related `added worker effect’. We use UK longitudinal data to investigate within households both the labour supply and informal care responses of an individual to the event of an acute health shock to their partner. Relying on the unanticipated timing of shocks, we combine coarsened exact matching and entropy balancing algorithms with parametric analysis and
exploit lagged outcomes to remove bias from observed confounders and time-invariant unobservables. We find no evidence of a health-related ‘added worker effect’. A significant and sizeable increase in spousal informal care, irrespective of spousal labour market position or household financial status and ability to purchase formal care provision, suggests a substitution to informal care provision, at the expense of time devoted to leisure activities.

Original language	English
Number of pages	34
Publication status	Published - 25 Mar 2021

Publication series

Name	GLO Discussion Paper Series,
Publisher	Global Labor Organization (GLO)
No.	806

Keywords

health shocks
added worker effect
labour supply
informal care
matching methods
panel data

Access to Document

http://hdl.handle.net/10419/232259

Cite this

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title = "Labour supply and informal care responses to health shocks within couples: evidence from the UKHLS",

abstract = "Shocks to health have been shown to reduce labour supply for the individual affected. Less is known about household self-insurance through a partner{\textquoteright}s response to a health shock. Previous studies have presented inconclusive empirical evidence on the existence of a health-related `added worker effect{\textquoteright}. We use UK longitudinal data to investigate within households both the labour supply and informal care responses of an individual to the event of an acute health shock to their partner. Relying on the unanticipated timing of shocks, we combine coarsened exact matching and entropy balancing algorithms with parametric analysis andexploit lagged outcomes to remove bias from observed confounders and time-invariant unobservables. We find no evidence of a health-related {\textquoteleft}added worker effect{\textquoteright}. A significant and sizeable increase in spousal informal care, irrespective of spousal labour market position or household financial status and ability to purchase formal care provision, suggests a substitution to informal care provision, at the expense of time devoted to leisure activities. ",

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