The Role of Coresidency with Adult Children in the Labor Force Participation Decisions of Older Men and Women in China

44 Pages Posted: 5 Apr 2014

See all articles by Rachel Connelly

Rachel Connelly

Bowdoin College - Department of Economics; IZA Institute of Labor Economics

Margaret Maurer-Fazio

Bates College - Department of Economics; IZA Institute of Labor Economics

Dandan Zhang

National School of Development, Peking University

Abstract

Over the course of China's economic reforms, a pronounced divergence in the labor force participation patterns of rural and urban elders emerged – rural elders increased their rates of participation while urban elders reduced theirs. In this project, based on the data of the Chinese population censuses of 1982 and 2000, we employ a two-stage procedure to take into account the endogeneity of the residency and labor force participation decisions of older persons.We find that the effect of coresidency with adult children on the labor force participation of older adult differs by urban vs. rural residence. In 1982, the LFPR of urban elders who coresided with their adult children were significantly higher than those who did not coreside. By 2000, this effect completely disappeared. In contrast, in rural areas, coresidency with adult children had a large and significant negative effect on the labor force participation of both male and female elders. This effect diminished only slightly over the reform period.Finally, we decompose the changes over time in elders' labor force participation decisions and find that the response effect for all groups (male and female, urban and rural) is positive, such that, holding the levels of demographic and economic variables constant, each group of elders would have had higher rates of participation in 2000 than in 1982. The remarkable divergence in urban and rural elders' labor force participation trends are due to differences in the relative sizes of their attribute and response effects.

Keywords: labor force participation, elders, China, retirement, coresidency, rural and urban, living arrangements

JEL Classification: J14, J26, J11, J12, J13, J16, J22, O15, O53, P23,

Suggested Citation

Connelly, Rachel and Maurer-Fazio, Margaret and Zhang, Dandan, The Role of Coresidency with Adult Children in the Labor Force Participation Decisions of Older Men and Women in China. IZA Discussion Paper No. 8068. Available at SSRN: https://ssrn.com/abstract=2420713

Rachel Connelly (Contact Author)

Bowdoin College - Department of Economics ( email )

Brunswick, ME 04011
United States
207-725-3790 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Margaret Maurer-Fazio

Bates College - Department of Economics ( email )

276 Pettengill Hall
4 Andrews Road
Lewiston, ME 04240
United States
207-786-6087 (Phone)
207-786-8338 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Dandan Zhang

National School of Development, Peking University ( email )

Beijing, 100871
China

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