Caregivers in the family: daughters, sons and social norms

We study long-term care (LTC) choices by families with mixed- or same-gender siblings. LTC can be provided either informally by children, or formally at home or in an institution. A social norm implies that daughters suffer a psychological cost when they provide less informal care than the average woman. Daughters have a lower wage than sons so that their opportunity cost of providing LTC is smaller. Families maximize a weighted sum of children's and parent's utilities. Because of the norm cost and the gender wage gap daughters will be the sole provider of informal LTC in mixed-siblings families. Sons provide LTC only if they have no female sibling. We show that the laissez-faire (LF) and the utilitarian first best (FB) differ for two reasons. First, because informal care imposes a negative externality on daughters via the social norm. Second, because the weights children and parents have in the family bargaining problem differ in general from their weights in social welfare. While these two problems are intertwined it appears that, unless children have a much larger weight than parents, too much informal care will be provided, especially by daughters, and that formal care should be subsidized. Previous papers suggest that LTC policies should "tolerate", as a side effect, some crowding out of informal care and that the latter should be encouraged. Our results suggest instead that, because of the existing social norm about gender roles in the family, optimal policies should "discourage" informal care through subsidies on formal LTC.