Mara Rebaudo - Willingness to Care - Financial Incentives and Caregiving Decisions

• Presenting author: Mara Rebaudo (Fraunhofer Institute for Applied Information Technology FIT)

• Authors: Mara Rebaudo, Lena Calahorrano, Kathrin Hausmann

• Session: B03A - Behavior [1] - Tuesday 14:00-15:30 - Ceremonial Hall

• Slides: PDF

As population aging will likely lead to an increasing number of people in need of care, the demand for informal care is expected to rise. It remains an open question whether this increased demand will be accommodated by informal carers, especially in times of changing family dynamics. In light of this, it is often discussed if financial incentives can induce more people to undertake caregiving responsibilities. We add to this discussion by analyzing the decision to get involved in caregiving in a structural model. Specifically, we extend the standard discrete choice approach for the labor supply decision to also model the caregiving decision of potential carers. Thereby, we account for preferences for income, leisure and caregiving. Running counterfactual analyses, we estimate how the caregiving decision is affected by individual wage changes and by financial incentives to care. We find that wage increases are associated with a decrease in the willingness to care. Financially compensating informal carers for the opportunity costs of care significantly increases caring participation. However, across different subgroups, a large proportion of potential carers remains for whom other factors such as preferences and social norms are more important than financial considerations in the caregiving decision.