The trade-off between formal and informal care in Spain.

Understanding the factors that determine the type and amount of formal care is important for predicting use in the future and developing long-term policy. In this context, we jointly analyze the provision of care at both the extensive (choice of care) and the intensive margin (number of hours of care received). In particular, we estimate and test, for the first time in this area of research, a sample selection model with the particularities that the first step is a multinomial logit model and the hours of care is an interval variable. Our results support the complementary and task-specific models which evidence has been found in other countries. Furthermore, we obtain evidence of substitution between formal and informal care for the male, young, married and unmarried subsamples. Regarding the hours of care, we find significant biases in predicted hours of care when sample selection is not taken into account. For the whole sample, the average bias is 2.77% for total hours and 3.23% for formal care hours. However, biases can be much larger (up to 10-15%), depending on the subsample and the type of care considered.

A sequential model of older workers' labor force transitions after a health shock.

In this paper we estimate and validate a three-period sequential model of older workers' labor force transitions following a health/disability shock, using retrospective information from Spanish cross-section data. Central to the analysis are the effects of the various disabilities and their severity. We find that the probability of remaining employed decreases both with age and the severity of the shock. Moreover, we find strong interactions between age and severity for older workers and none for prime-age workers. Suffering any kind of disability reduces the probability of being employed immediately prior to retirement age, and in such cases it is severity which is the strongest indicator. With respect to demographics, we find that female gender, having a retired spouse or being married all reduce the probabilities of both remaining in employment and returning to work following a spell of inactivity; in turn, principal breadwinner status, education and skill levels increase this likelihood.