Association for Public Policy Analysis & Management

Unpaid caregiving for the elderly is a growing phenomenon in aging societies. Survey data suggest that most unpaid caregivers work, but they often face adverse labor market consequences. They involuntarily work fewer hours, have lower earnings and face potentially more volatile incomes as they try to balance unexpected caregiving events and work.

These labor market outcomes can directly impact savings and potentially result in less wealth for elder caregivers, putting them in a financially precarious situation. Fewer hours at work can mean that caregivers are less likely to qualify for employer benefits. Lower earnings will make it harder for caregivers to pay their bills and continue to save. And, more volatile incomes due to unexpected demands from caregiving may lead caregivers to focus more on the short term and forego saving for their own future.

Using U.S. household survey data, we find that unpaid caregiving indeed correlates with less savings. Unpaid caregivers are less likely to save in general, are less likely to participate in employer-sponsored retirement plans, contribute smaller amounts to their retirement accounts and have fewer emergency savings. Fewer savings then also correlate with less wealth. Our results, for instance, show that caregivers 50 years and older have between one-third and two-thirds the wealth of non-caregivers.