Lundberg and co-authors used a 1998 reform in the federal funding of local home-based care for the elderly in Norway to examine the effects of formal care expansion on the labor supply decisions and mobility of middle-aged children. Their main finding is a consistent and significant negative impact of formal care expansion on work absences longer than 2 weeks for the adult daughters of single elderly parents. Results provide evidence of substitution between formal home-based care and informal care for the group that is most likely to respond to the parent's need for care -- adult daughters with no siblings to share the burden of parental care. These results also highlight the importance of labor market institutions that provide flexibility in enabling women to balance home and work responsibilities.
*Research conducted with Katrine V. Loken and Julie Riise