Caring to Work or Working to Care

Abstract

We seek to understand how the labor market decisions of the family adjust in response to plausibly exogenous health shocks. Family members might work less to provide caregiving, or work more in response to medical expenditures and loss of income by the ill individual. We use records of emergency department (ED) visits and hospitalizations to empirically determine the size of these effects. Using ED events, we find evidence of intra-family insurance. By exploring how insurance varies by the severity of the health shock, we find that family labor supply responses decrease as the caregiving need increases.