August 2004

IZA DP No. 1273: Carefree? Participation and Pay Differentials for Informal Carers in Britain

Axel Heitmueller, Kirsty Inglis

published as "The earnings of informal carers: Wage differentials and opportunity costs" in: Journal of Health Economics, 2007, 26 (4), 821-841

A substantial proportion of working age individuals in Britain are looking after sick, disabled, and elderly people and combine work and caring responsibilities. Using the British Household Panel Study (BHPS) for the years 1991 to 2002 this paper studies the determinants of labour market participation as well as earnings differentials for informal carers and non-carers over time. In particular, the paper decomposes participation and wage differentials for non-carers and carers and shows that carers are systematically disadvantaged. Furthermore, opportunity costs from forgone wages and wage discrimination are estimated and found to be substantial.