Cluster-Seminar Öffentliche Finanzen und Lebenslagen

This paper estimates a structural dynamic discrete choice model on parental care provision, retirement and labor supply. We want to estimate the dynamic consequences of providing informal care or organizing formal care for care dependent parents. While there might be negative long term consequences on wages and retirement benefits, agents might respond to incentives in the long term care systems (LTC) in Germany and provide care anyways. We contribute to the literature by firstly disentangling parental care demand from the care decision and secondly by incorporating formal care options in the model. Using the estimated parameters we aim to analyze the consequences of increased retirement benefits on care provision and the care mix. Further, we want to analyze the consequences of the introduction of care times incorporating wage replacement benefits in the German system on the care mix and labor market participation of women with care demand.