Family Bargaining and the Gender Gap in Informal Care

Résumé

We study the optimal long-term care (LTC) policy when informal care can be provided by children in exchange for monetary transfers from their elderly parents. We consider a bargaining model with single-child families, where daughters have lower labor market wages, and bargaining power within the family varies by the child's gender. In the laissez-faire scenario, daughters always provide more informal care than sons. When their bargaining weight is smaller, they also experience lower welfare; however, this may be reversed if their bargaining weight is sufficiently high. The first-best outcome involves redistribution from families with sons to families with daughters and can be implemented through a gender-specific schedule of public LTC benefits and state-contingent transfers to adult children. Gender neutrality disadvantages families with daughters and may even leave daughters worse off than under laissez faire. It also leads to a distorted allocation of care within families with daughters and affects the distribution of transfers in all families.