The Family Care Contract: Childcare, Long-Term Care, and Intergenerational Insurance
Coauthors: Karen Kopecky and Bettina Siflinger
Abstract:
Parents who provide informal childcare to their grandchildren are significantly more likely to receive informal long-term care from their adult children in return. Within families, children who received informal childcare from a parent are 13.5 percentage points more likely to later provide that parent with long-term care. While residential proximity is likely partly endogenous to care arrangements, controlling for it yields a statistically significant estimate of 5.7 percentage points, suggesting the relationship reflects more than just geographic feasibility. We also document significant heterogeneity in these informal care arrangements. Grandparent care provision is most common among high-income families, while reciprocity is strongest among low-income families. These patterns suggest that policies affecting the availability of formal childcare may have spillover effects on informal long-term care provision, and vice versa. To understand the mechanisms behind these patterns, we develop a general equilibrium limited commitment model of intergenerational caregiving.
Organized by: Henry Siu
