Working Paper: CEPR ID: DP17539
Authors: Helmuth Cremer; Chiara Canta
Abstract: We study the optimal long-term care policy when informal care can be provided by children in exchange for monetary transfers by their elderly parents. We consider a bargaining model with single-child families. Daughters have a lower labor market wage and a lower bargaining power within the family with respect to sons. Consequently, they provide more informal care and have lower welfare in the laissez-faire (although not necessarily lower transfers). The first best involves redistribution from families with sons to families with daughters and can be implemented by a gender-specific schedule of public LTC benefits and transfers to working children. If the policy is restricted to be gender neutral, we find that the informal care provided by daughters should be distorted up to enhance redistribution from families with sons to families with daughters. Transfers within the family should be distorted in both types of families.
Keywords: long-term care; informal care; strategic bequests; family bargaining; gender neutrality
JEL Codes: D13; H23; H31; I19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| gender of the child (J16) | amount of informal care provided (D13) |
| amount of informal care provided (D13) | welfare of caregivers (I39) |
| lower labor market wages and bargaining power (F66) | more informal care by daughters (D13) |
| gender-specific policies (J16) | informal care provision (D13) |
| gender-neutral policies (J78) | distort informal care provided by daughters (D13) |
| redistribution from families with sons (J12) | families with daughters (J12) |
| transfers within families (J12) | equitable outcomes across genders (I24) |