The effect of long-term care insurance on labor force participation among informal caregivers: evidence from China

To meet the long-term care needs of older people and relieve the pressure of family caregiving, China has launched long-term care insurance (LTCI) pilots. However, it remains uncertain whether and how it affects the labor behavior of informal caregivers. Based on the China Health and Retirement Longitudinal Study, this study empirically examines the effect of LTCI on labor force participation of informal caregivers using a staggered difference-in-difference method. The results show that LTCI increased non-agricultural employment of informal caregivers, but its impact on agricultural employment was not significant. Mechanism analysis reveals that the decrease in hours of caregiving was the channel through which LTCI promoted non-agricultural employment among informal caregivers. Furthermore, the beneficial effects of LTCI shows heterogeneity in sociodemographic characteristics and policy design. Female, married, less educated, and healthier informal caregivers were more strongly affected by LTCI. The labor force participation effect was more pronounced for LTCI pilots, those covering the Urban Employee Basic Medical Insurance enrollees, providing support for people with severe and moderate disability, and offering only institutional care. More attention should be paid to the fairness of system operation, ensuring equal opportunities for informal caregivers to participate in the labor market. At the same time, encouraging disabled people to choose service payments and enhancing home-based care services are essential steps to help informal caregivers balance family responsibility and career development, thereby fostering a labor-friendly LTCI system.