Grandmothers’ Labor Supply

We use high-quality administrative data from Austria to estimate the effect of grandmotherhood on the labor supply decision of older workers. Assuming that grandmothers cannot predict the exact date of conception of their grandchild, we identify the effect of the first grandchild on employment. Our timing-of-events approach shows that a first grandchild increases the probability of leaving the labor market by 9 percent. This effect is stronger when informal childcare is more valuable and when grandmothers live close to the grandchild. To assess the effect of an additional grandchild, we also use twin births among the first grandchild as instruments.