Should we subsidize elder care more?
A new doctoral thesis by IIES graduate student Patrizia Massner looks into some of today’s most pressing social and economic challenges (from aging populations to inequalities in work and family life), and discusses the relevant policies aiming to address these challenges. Drawing on Sweden’s unusually rich administrative data, Patrizia’s research provides new evidence based insights in these topics.
Subsidized elder care cuts hospitalizations and boosts family incomes
In a reform in 2002, Sweden reduced elder care fees by on average 40% in two-thirds of Sweden’s municipalities. For seniors, lower fees increased utilization of elder care services, leading to improvements in seniors’ health due to fewer hospitalizations for conditions that are preventable or treatable outside the hospital. For adult children, with parents receiving professional care, adult children worked more, earned more, and shifted to higher-paying jobs, reducing the caregiving-work conflict.
Benefits like improved senior health management and increased tax revenue from working adult children can cover the subsidy cost within a decade. This shows that elder care subsidies aren’t just expenses—they’re investments with lasting effects: improved health management for seniors, economically empowered children, and long-run fiscal benefits outweighing the initial costs.
Upward mobility comes at a higher personal cost for the disadvantaged
Many children from low-income families in Sweden achieve high-paying careers, but the cost is steep. Compared to peers from wealthier backgrounds, they delay parenthood, have fewer children, and spend less time with them.
These findings suggest that achieving the same economic outcomes often requires greater personal sacrifices for those starting at the bottom. Standard intergenerational mobility metrics overlook these trade-offs, potentially overstating how equal opportunity really is.
In short, not all paths to success are created equal, and some come with hidden costs.
The role of employer labor market power in involuntary part-time employment
In areas where labor market concentration increases (say, after a large nearby employer shuts down and outside options for workers shrink) firms gain more labor market power over the remaining workers. Patrizia finds that part-time employees feel this shift: their wages drop and their hours shrink.
Full-time workers also see wage declines, but their hours stay steady. This asymmetry highlights how vulnerable part-time workers are to employer labor market power and involuntary part-time employment.
Remote management increases wages and changes worker composition at firms
What are the implications for workers and firms when adopting remote work? When companies hire new managers who live farther away, they increase the share of workers working remotely. This goes along with workers earning more, but no increase in hours worked.
This suggests that the adoption of remote work is associated with greater flexibility and wage growth, with firms experiencing composition changes in their workforce as the average age and education level at the firm rises.
Patrizia’ thesis not only identifies some of today’s challenges but also discusses public policies aiming to address these.
Patrizia successfully defended her thesis "Essays on Elder Care, Intergenerational Mobility, and Firms in the Labor Market" on Friday 13 June. Håkan Selin from The Institute for Evaluation of Labour Market and Education Policy (IFAU) at Uppsala University kindly acted as opponent.
Last updated: June 23, 2025
Source: Institute for International Economic Studies (IIES)