Fertility Cost, Intergenerational Labor Division, and Female Employment

38 Pages Posted: 21 Feb 2019

See all articles by Beata Smarzynska Javorcik

Beata Smarzynska Javorcik

University of Oxford - Department of Economics

Jin Cao

Norges Bank, Research Department; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: 2018

Abstract

China has set to increase the minimum retirement age, to ease the pressure from pension expenditure and the falling labor supply caused by the aging population. However, policy debates have so far neglected the crucial fact that families in China largely rely on retired grandparents for childcare. Using novel and high-quality survey data, we demonstrate that intra-family downward labor transfer towards childcare significantly increases young females’ labor force participation rate and their labor income, and such effects do not exist for males. Furthermore, we show that the positive effects from grandparental childcare are higher for better-educated, urban females with younger children. This paper thus reveals a large, hidden cost in the new retirement policy — the reduced feasibility of grandparental support, due to postponed retirements, may crowd out productive labor of young females, — and rationalizes a series of social protection policies to accompany the phase-in of the new retirement scheme.

Keywords: intergenerational labor division, grandparental childcare, female employment, human capital accumulation, minimum retirement age

JEL Classification: C240, J130, J220

Suggested Citation

Smarzynska Javorcik, Beata and Cao, Jin, Fertility Cost, Intergenerational Labor Division, and Female Employment (2018). CESifo Working Paper No. 7293. Available at SSRN: https://ssrn.com/abstract=3338619

Beata Smarzynska Javorcik (Contact Author)

University of Oxford - Department of Economics ( email )

Manor Road Building
Manor Road
Oxford, OX1 3BJ
United Kingdom

Jin Cao

Norges Bank, Research Department ( email )

Bankplassen 2, PB 1179 Sentrum
Oslo, NO-0107
Norway

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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