Informal and formal care in Europe

Government expenditure on formal residential care and home-help services for the elderly significantly reduces 45-59 year old women´s informal care-giving affecting both the extensive and the intensive margin. Allowing for country fixed-effects and country-specific trends and correcting for attrition, the estimates - based on the European Community Household Panel - imply that a 1000 Euro increase in the government expenditure on formal residential care and home-help services for the elderly decreases the probability of informal care-giving outside of the caregiver´s household by 6 percentage points. Formal care substitutes for informal care that is undertaken outside of the carer´s own household, but does not substitute for intergenerational household formation. A simulation exercise shows that an increase in government formal care expenditure can be used to increase the labour force participation rates and a back-of-envelope cost-benefit calculation suggests the policy to be cost-effective

Childcare voucher and labour market behaviour: Experimental evidence from Finland

This paper provides experimental estimates of the impact of a voucher for private care within the Nordic system of universal provision of public care. The private childcare voucher acted as a significant boost for new childcare entrepreneurs to enter the market thus increasing the overall childcare provision in the municipalities participating in the experiment. In a market that was providing high-quality, low-cost public childcare, a voucher is nevertheless found to have a significant, positive effect for the use of private childcare with zero to negligible effects on the use of public care and labour force participation

Informal eldercare across Europe: Estimates from the European Community Household Panel

This paper uses the European Community Household Panel to analyse the relationship between the dynamics of labour force participation and informal care to the elderly for a sample of 20-59 year old women across 13 European countries. The analysis has two focal points: the relative contributions of state dependence as well as observed and unobserved heterogeneity in explaining the dynamics in female labour force participation and the existence and consequences of non-random attrition from the panel. The results indicate positive state dependence in labour force participation in all 13 EU countries used in the analysis. The share of unobserved heterogeneity accounts for between 45% and 86% of the total variation in labour force participation. Informal care-giving is found to have a significant, negative impact on the probability of employment only in Germany. However, analysis for different sub-groups indicates that the impact is largest for the middle age women and also for single women in several EU countries.informal elderly care, female labour force participation, dynamic binary response models, ECHP, attrition bias

Parental Divorce and Generalized Trust

This paper examines the effect of parental divorce during childhood on generalized trust later on in life using Australian HILDA panel data. The dependent variable is composed of answers to the statement: “Generally speaking, most people can be trusted”. The main explanatory variables include the occurrence of parental divorce for the whole sample and the age at which parents divorced for the sub-sample. The analysis is conducted using random effects ordered probit, correlated random effects ordered probit and instrumental variables ordered probit models. The results indicate that the level of generalized trust is significantly affected by parental divorce for both men and women. This main result is very robust to alternative specifications. Furthermore, there is a marginally significant effect on the expressed level of generalized trust due to age at which parents divorced for women, but not men.parental divorce, generalized trust, HILDA, random effects ordered probit, instrumental variables ordered probit

The North is poorer and contributes far less to the national GDP than the South East, but compared to the national pay gap, it is fairer up North.

Ed Miliband recently addressed the subject of pay inequality in a speech at the Resolution Foundation’s launch of the Commission on Living Standards, highlighting the growing gap between the top and bottom wage earners in the country and concluding that the benefits of economic growth are not shared fairly. Jenni Viitanen argues that observations about the way in which economic growth tends to disproportionately benefit a narrow section of the wealthiest in society underscore the question of who and what remain in the shadows of the UK economy.

The Effect of Divorce Laws on Divorce Rates in Europe

This paper analyzes a panel of 18 European countries spanning from 1950 to 2003 to examine the extent to which the legal reforms leading to "easier divorce" that took place during the second half of the 20th century have contributed to the increase in divorce rates across Europe. We use a quasi-experimental set-up and exploit the different timing of the reforms in divorce laws across countries. We account for unobserved country-specific factors by introducing country fixed effects, and we include country-specific trends to control for time-varying factors at the country level that may be correlated with divorce rates and divorce laws, such as changing social norms or slow moving demographic trends. We find that the different reforms that "made divorce easier" were followed by significant increases in divorce rates. The effect of no-fault legislation was strong and permanent, while unilateral reforms only had a temporary effect on divorce rates. Overall, we estimate that the legal reforms account for about 20 percent of the increase in divorce rates in Europe between 1960 and 2002

The Impact of Children on Female Earnings in Britain

This paper examines the impact of children on female wages in the UK using the National Child Development Study. Empirically this involves using an extension of the Roy model, which simultaneously corrects for the endogeneity of labour force participation and fertility. The wage differential between women without children and women with children is estimated to range between 19% and 22% not accounting for endogeneity. This result confirms the findings of many previous studies, however, the results indicate substantial non-random selection into employment for women hence leading to biased OLS estimates. The wage differential reduces to 16%-18% instrumenting participation and fertility, however, using the estimates obtained from the double-selection model, the wage differential between mothers and childless women reduces to just 10%-13%.Female labour supply; Fertility; Wage differentials

The Long Term Effects of Legalizing Divorce on Children

We estimate the effect of divorce legalization on the long-term well-being of children. Our identification strategy relies on exploiting the different timing of divorce legalization across European countries. Using European Community Household Panel data, we compare the adult outcomes of cohorts who were raised in an environment where divorce was banned with cohorts raised after divorce was legalized in the same country. We also have "control" countries where all cohorts were exposed (or not exposed) to divorce as children, thus leading to a difference-in-differences approach. We find that women who grew up under legal divorce have lower earnings and income as well as worse health as adults compared with women who grew up under illegal divorce. These effects are not found for men. We find no effects of divorce legalization on children's family formation or dissolution patterns.divorce, legislation, intergenerational effects, child outcomes

The Long-Run Labour Market Consequences of Teenage Motherhood in Britain

Common wisdom states that teenage childbearing reduces schooling, labour market experience and adult wages. However, the decisions to be a teenage mother, to quit school, and be less attached to the labour market might all stem from some personal or family characteristics. Using the National Child Development Study (NCDS), we find that in Britain teenage childbearing decreases the probability of post-16 schooling by 12% to 24%. Employment experience is reduced by up to three years, and the adult pay differential ranges from 5% to 22%. The negative impact of teen motherhood on various adult outcomes is not due to some pre-motherhood characteristics; hence policies aiming to encourage return to school and participation in the labour market may be an efficient way to reduce the long-term consequences of teenage pregnancy.Teenage pregnancy, schooling decisions, wages