Microsimulation & Econometric Data Analysis

The growing number of people in need of care is a major challenge for society. More working-age family members providing informal care can exacerbate the shortage of skilled workers and result in lost income for both caregivers and the state. For sound policy decisions we need to better understand the factors influencing the willingness of family members to assume informal caregiving responsibilities. In 2025, we investigated how financial incentives and social norms affect the willingness to provide care.

As the population ages, the proportion of people in need of care is rising. This makes care for the elderly a growing societal problem. According to German care statistics, over 85 percent of those in need of care are cared for at home. The likelihood of family members taking on caregiving decreases with higher labor incomes. This is due in part to opportunity costs: individuals with higher wages forgo more when they reduce their paid work to provide care. Preferences and social norms also play a role: a strong family orientation may have led to lower career investments, and people with lower earned income appear to be more likely to be expected to take on caregiving responsibilities.

To separate the influence of opportunity costs from that of social norms, we simulated the compensation for each hour of caregiving based on the respective individual wage. The results show that this would eliminate the differences in caregiving probabilities between earners of high and low labor income. At the same time, roughly half of potential caregivers would still decide against providing care. Differences in caregiving probabilities between men and women would not be leveled out. Thus, there appears to be a social norm that assigns greater caregiving responsibility to women, but not to low-income earners. If potential caregivers were instead paid a fixed amount, the differences between high- and low-income earners would not level out either. You can read the complete results here.

The analyses are based on a microsimulation model that we developed on behalf of the Federal Ministry of Education, Family Affairs, Senior Citizens, Women, and Youth to address issues in informal care. In addition, we regularly publish a fact sheet with data on informal care as a standardized basis for policy discussions.