Delayed Retirement, Intergenerational Transfers, and Fertility

Population aging and fertility decline are occurring simultaneously worldwide, straining labor supply and pension systems. China began a gradual delayed-retirement (GDR) reform in 2025, raising statutory retirement ages on different schedules for men, female cadres, and female workers across birth cohorts. To evaluate its effects on older individuals and within the family, we develop a model of older adults' retirement, intergenerational transfers, and adult children's fertility decisions, with parameters estimated via fuzzy regression discontinuity at the pre-2025 statutory retirement ages. Counterfactual simulations show that, for mature reform cohorts, the GDR reform increases older employment and monetary transfers to adult children but reduces grandparental childcare. Because the reduction in childcare outweighs the increase in monetary transfers, fertility and older adults' welfare decline, with particularly large losses among lower-income women. Fully flexible retirement, mandatory partial retirement, and mandatory full-time work do not raise employment without similarly reducing fertility and welfare. Childcare subsidies can offset the declines in fertility and welfare, while restricting eligibility to women or lower-income women requires higher subsidy rates but reduces average fiscal expenditure. These findings suggest that evaluations of retirement policy should consider not only its direct effects on older adults' labor supply, but also its fertility effects through intergenerational transfers; childcare support can help mitigate these negative intergenerational effects of delayed retirement.