Abstract: Economic theory suggests that elderly long-term care (LTC) needs may have broad and heterogeneous effects on families, beyond the well-studied disemployment costs associated with caregiving. Using rich administrative data, we find that health shocks to the elderly cause large families to grow larger: adult children are more likely to get married, and they have more children of their own. These responses are persistent over time, and they are consistent with the idea that LTC needs induce family members to substitute from formal employment into a mix of informal caregiving and home production. Members of smaller families, by contrast, experience sharp increases in mortality risk, in a way that is consistent with caregiving-related ``deaths of despair." Leveraging sharp policy changes in Taiwan that greatly increased access to international labor markets for formal live-in caregivers, we causally estimate how hiring a formal caregiver mitigates the costs (and incidental benefits) of elderly LTC needs to families.
With Kuan-Ming Chen and Kuan-Ju Tseng
