1 Does Labor Force Participation Reduce Informal Caregiving ?

This paper examines the causal impact of labor force participation on informal caregiving. To address the endogeneity of labor force participation, we exploit local business cycles and instrument for individual labor force participation with state unemployment rates. Using data from the Survey of Income and Program Participation (SIPP), we find that labor force participation significantly reduces informal caregiving. Among women, working an additional 10 hours per week reduces the probability of providing informal care by 12.5 percentage points and reduces the number of care hours by 32 percent. We also find that the effect of labor force participation is stronger among women with low income and wealth, who are the most important target of many welfare policies that promote labor force participation. Our results imply that demographic trends and work-promoting policies have the unintended consequence of reducing informal caregiving in an aging society that faces rising demand for informal care.