Estimating the cost of informal care with a novel two-stage approach to individual synthetic control

Informal carers provide the majority of care for people living with challenges related to older age, long-term illness or disability, often at significant personal cost. Leveraging data from the UK Household Longitudinal Study, this paper provides the first robust causal estimates of the caring income penalty using a novel individual synthetic control based method that accounts for unit-level heterogeneity in post-treatment trajectories over time. Our baseline estimates identify an average relative income gap of up to 45%, with monthly losses averaging £162, peaking at £192 after four years for high-intensity unpaid carers. We find that the income penalty is more pronounced for women than for men, and varies by ethnicity and age.