Should Elder Care Be Subsidized?

This paper studies how subsidies for formal elder care services impact the economic and health outcomes of seniors and their adult children. We exploit a reform in Sweden lowering the fee for elder care by 40% on average across two-thirds of Sweden's municipalities. Using new data on these fees, combined with administrative data, we find that increases in the take-up of formal elder care go along with both reductions in hospitalizations among affected seniors and increases in the labor supply of their adult children. Seniors benefit from significant improvements in morbidity, due to fewer hospitalizations for conditions preventable or treatable outside of the hospital. At the same time, adult children increase their annual earnings. We show that these effects are persistent as adult children keep working in less flexible but higher-paying jobs, also after the parental care responsibilities have ended. To assess the welfare implications, we build a model that incorporates formal and informal caregiving. We show that the implicit optimal subsidy balances the value created from insuring parents against substantial permanent health shocks and the costs of raising taxes to finance the subsidy. Combining the theory with the empirical results, we find that subsidizing elder care becomes self-financing within a decade of implementation.

 The Unequal Cost of Careers, Intergenerational Mobility, and Equality of Opportunity

The standard measures of intergenerational mobility overlook the costs of upward mobility. One such cost arises from the career-family tradeoff. Theoretically, greater costs (i.e., a steeper tradeoff) for individuals from disadvantaged backgrounds imply that income mobility overestimates welfare mobility. Empirically, Swedish administrative data show that, indeed, to attain a career (higher lifetime income), individuals from low-income families sacrifice more of their family life. They delay childbearing, have fewer children, and spend less time with each child. These disparities arise from a more arduous path to success, shaped by disadvantages in time and space. 

 Employer Labor Market Power and Working Hours

This paper analyzes the role that firm labor market power plays in shaping involuntary part-time employment in Sweden. We use an identification strategy based on part-time workers who experience an increase in local labor market concentration caused by a large layoff event at another firm within the same labor market. We compare these workers to unaffected colleagues in different occupations within the same plant. Our findings reveal that increased labor market concentration substantially reduces wages and working hours for part-time workers. Full-time workers experience similar declines in wages, but no effect on working hours.

 Remote Work

This paper studies the effect of remote work on worker and firm outcomes using administrative data from Sweden. We implement an event-study design leveraging variation in the residential distance between newly hired managers and their firms. Firms that hire new managers living farther away subsequently increase the use of remote work. Furthermore, we find increases in worker earnings and wages, with no significant change in hours worked.