Effect of Caregiving on Employment for Senior Workers in Japan

Abstract

Policymakers worldwide focus on the implementation of policies to improve the work-life balance of senior workers considering long-term family care. We examine the relationship between parental caregiving and labor force participation, as well as work hours, for senior workers in Japan, where elderly care remains a crucial policy issue. We use large-scale government panel data for the years between 2007 and 2014. We consider the status of living with a parent and endogenous problems concerning the decisions of caring for parents while keep working. We also consider the time-invariant heterogeneities using fixed effects regressions, and the time-variant heterogeneities using fixed effects with instrumental variable regressions. We find that caregiving has a smaller impact on labor force participation than in previous studies, for both senior female workers living without a parent and male workers regardless of the living-with-parent status. Females workers living with a parent show a significant reduction of labor force participation, even after considering the time-variant heterogeneities. Caregiving has no significant effect on the reduction of work hours. We suggest that policies to encourage the transition to reduced work hours, while continuing to work utilizing flexible working arrangements should be actively implemented.

Appendix

Overview of the National Long-Term Care Insurance (LTCI)

Japan’s LTCI system is designed to “socialize the care burden” from households to society (Campbell and Ikegami 2000).¹⁹ Municipalities are the insurers, and program participation is mandatory. The primary insured persons are those aged 65 and above (Category I), and secondary insured persons are subscribers to health insurance aged between 40 and 64 years (Category II).²⁰ The premiums differ by insurer and income level and are deducted from the pension benefits for individuals in Category I and salaries for those in Category II.

When Category I subscribers need long-term care, a certification by the municipality is required, which is issued after a two-step evaluation process. The first step is a computer-based evaluation using a questionnaire regarding the physical and mental status in daily life and the doctor’s diagnoses. The second stage evaluation is conducted by a certification committee. Once the individual receives the certification, he/she is classified under one of seven categories: support levels 1 and 2 and care levels 1–5, depending on the level of care needed. The extent of the services provided is determined based on these categories. For support levels 1 and 2, the types of care services are home visits, outpatient rehabilitation, and short-term stays at a care facility. For care levels 1–5, care services include in-home services such as home help services and daycare; facility services such as intensive care at home, long-term healthcare facilities, and sanatorium-type care facilities; and community-based services, such as home visits at night, daycare for dementia patients, and small-scale multifunctional in-home care. The upper limit on available care services is specified depending on the care level.

Panel A of Fig. 1 shows the revisions to LTCI.²¹ We limit the revisions considered here to those related to the employment of the caregivers. In the 2006 revision, the community-based service was established, which aimed at improving the coordination between medical treatment and long-term care. Care prevention benefits were also introduced to increase the service benefits for relatively light-care-needs recipients. These revisions were considered to reduce the burden on caregivers. In the 2012 revision, advanced efforts for the integrated community care system were introduced to promote comprehensive support for care recipients by improving the coordination among medical treatment, long-term care, care prevention, and housing.²²

Fig. 1.

Revisions of the long-term care insurance and child and family care leave act (Source: MHLW (2013, 2015b, 2016a, 2017)) Note: N > =100 represents that the number of employees is 100 or more, and N < 100 represents that the number of employees is 99 or less

Overview of the Child and Family Care Leave Act (CFCLA)

The CFCLA was reorganized in 1995. The objective of the act is to improve the working environment for men and women so that they can keep working even when they need to take care of their families (MHLW 2017). Panel B of Fig. 1 shows the revisions to this act.²³ In the 1995 revision, a one-time family care leave of up to 3 months and the prohibition of dismissal because of caring activities were introduced. After the 1999 revision, workers were allowed to take measures, such as shorter working hours, a flexible work hour system, a staggering working hour system, and benefits to cover expenses incurred by workers in case they use the LTCI and other equivalent systems. Employers were obligated to choose among these, within a limit of 93 days, including family care leave. In addition, a prohibition of late-night working hours was introduced. After 1999, the act became an obligation of the employer. A prohibition against disadvantageous treatment due to caregiving was introduced in 2001, and restrictions on overtime work hours and the obligation of employers to consider a change of workplace were introduced in 2002. After 2005, the family care leave was extended to a one-time limit of 93 days. After 2010, workers were permitted to take 5 days of time-off for family care.²⁴ All significant regulations were established before our sample period except the 5 days of time-off introduced in 2010.²⁵