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Fertility Cost, Intergenerational Labor Division, and Female Employment

Author

Listed:
  • Haiyue Yu

    (Dongbei University of Finance and Economics, Interdisciplinary Center for Social & Behavioral Studies)

  • Jin Cao

    (Norges Bank)

  • Shulong Kang

    (Dongbei University of Finance and Economics School of Finance)

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 intrafamily 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.

Suggested Citation

  • Haiyue Yu & Jin Cao & Shulong Kang, 2019. "Fertility Cost, Intergenerational Labor Division, and Female Employment," Working Paper 2019/3, Norges Bank.
    • Handle: RePEc:bno:worpap:2019_03
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    File URL: https://www.norges-bank.no/en/Published/Papers/Working-Papers/2019/32019/
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    Cited by:

    1. is not listed on IDEAS
    2. Yu, Haiyue & Cao, Jin & Kang, Shulong, 2021. "Who cares: Deciphering China's female employment paradox," BOFIT Discussion Papers 7/2021, Bank of Finland Institute for Emerging Economies (BOFIT).
    3. Yu, Haiyue & Cao, Jin & Kang, Shulong, 2021. "Who cares : Deciphering China’s female employment paradox," BOFIT Discussion Papers 7/2021, Bank of Finland, Institute for Economies in Transition.

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    Keywords

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    JEL classification:

    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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