Health Economics

Providing care to a disabled parent can be a psychologically strenuous activity with potential negative consequences for the caregiver's mental health. At the same time, experiencing the declining health of a parent – often the very reason for the parent's care needs – can impact the adult child's mental health negatively. Because both events are usually observed simultaneously, disentangling the “caregiver effect” and the “family effect” remains a challenge. Using longitudinal data of the elderly population in Europe and an instrumental variable approach to address possible endogeneity concerns, this paper separately estimates the effect of caregiving and the decline of a parent's health on adult children's mental health. While I find negative but small caregiver and family effects for the “average” caregiver, the caregiver effect is multiplied for daughters if care provision is triggered by higher parental care needs.