Allocation of Labor to Informal Home Health Production: Health Care for Frail Elderly, if Time Permits

This paper examines the impact of family caregiving on the allocation of time among labor market, caregiving, and leisure activities. A reduced form regression model is the framework for analysis of these simultaneous decisions. The analysis indicates that the number of caregivers and type of responsibilities assumed are significantly related to the caregiving time allocation decision. Alternatively, leisure and employment decisions are predominantly determined by the financial status of the caregiver and health status of both the caregiver and the impaired elderly relative. Research on health care for the elderly has addressed the role of home health care as a cost effective substitute for more expensive and impersonal market-supplied health services, in particular, hospital and nursing home care (Kramer, Shaughnessy, and Pettigrew 1985; Vogel and Palmer 1984). Input costs of market-supplied home care are carefully defined and assessed. The cost of service providers (wages and salaries) and the cost of renting technological devices for home utilization are measures of per visit costs of home care. Some studies add estimates of the cost of food and housing to estimates of per visit costs (Bergner et al. 1988). Assessments of costs of market-supplied home care seldom include estimates of the opportunity cost resulting from the use of informal caregivers, usually family members and friends, to provide home care. These caregivers contribute time that aids in the effective administration and provision of market-supplied home health services or, for some families, may serve as a substitute for market-supplied home services. They administer medicine, provide physical therapy, monitor technological equipment, provide transportation, as well as assist with bathing and housework. Moreover, caregivers frequently do not receive monetary reimbursement for these activities which reduces input costs of market-supplied home health care and out-of-pocket expenditures on medical services. Nonetheless, when informal caregivers allocate time to home care production, they have less time available for labor market activities, household production, child care, and leisure. The exclusion of estimates of the opportunity cost of informal care is explained, in part, by the limited availability of data for such an analysis. One study, Hu, Huang, and Cartwright (1986), compensates for this deficiency by using market values of home health aide time to measure the value of services provided by informal caregivers. However, research on the value of home work time (Havrylyshyn 1976; Zick and Bryant 1983) suggests that such estimates understate the value of informal caregivers' time. Another reason that studies exclude estimates of the caregiver's contribution to informal home health is limited understanding of the nature of time tradeoffs involved in the caregiver's allocation of time among home health care and other activities that compete for time. Research about the diverse informal home health sector is in its preliminary stages. The majority of research uses data from small sample surveys whose objective is to describe the sociodemographic characteristics of caregivers. More recently there have been assessments of informal care teams, primary and supplemental caregivers, and their task assignments (Stephens and Christianson 1986). Only a few researchers have used multivariate frameworks to examine the determinants of caregiving hours (Moscovice, Davidson, and McCoffrey 1988; Stoller 1983). To date, one study has evaluated labor market decisions of caregivers (Muurinen 1986). Research describing the sociodemographic characteristics of caregivers and addressing the determinants of caregiving hours suggests the types of opportunity cost experienced in the informal home care sector. For example, using national data, Stone, Cafferata, and Sangl (1987) describe caregivers as predominantly female whose average age is 57. …