Increasing States’ Minimum Wage Rates: Do Increased Opportunity Costs Affect Informal Elder Caregivers? Open Access

Sroczynski, Nolan (Summer 2019)

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Informal elder caregivers—individuals age 18 to 64 who provide care to an individual or individuals age 65 and older—provide a valuable service not only to the recipient, but also the healthcare system through free labor. However, these caregivers must optimize their own welfare through labor and leisure activities just as non-caregivers do, and their decision to be employed could impact their decision to provide such informal care and/or how much time they have to spend on themselves if they continue to provide care. If informal caregivers reduce time spent providing such care and it is substituted with formal care, the additional burden will likely be placed on the Medicaid system, which pays for the majority of long-term services and supports.

This study exploits the variation in state minimum wage rates to analyze whether the increased opportunity cost of an increase in the minimum wage rate results in labor market changes and amount of time spent on the personal care of the caregiver. Utilizing the combined American Time Use Survey and Current Population Survey data, a difference-in-difference methodology was applied with controls for state-level, caregiver, and recipient confounders. When minimum wage increases, the likelihood of employment among male informal caregivers also increase. There are no statistically significant employment effects for females, nor any significant effects for males or females on personal care time or sleep time. As localities, states, and federal institutions explore increases in minimum wage, one should consider the potential for unintended consequences in a cost-benefit analysis.

Table of Contents

Introduction 1

Literature Review 7

Eldercare in the United States 9

Government Incentivization of Employment 12

Theoretical Models 13

Previous Literature 16

Conclusion 31

Methods 32

Theoretical Framework 33

Research Design 38

Measures 44

Analytic Strategy 51

Results 67

Discussion 78

Study Strengths and Limitations 80

Implications of the Study Results 82

Recommendations for Future Research 85

References 87

Appendix 97

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