Grandparents and Parental Labor Supply during COVID-19 Pandemic

This study examines whether and to what extent the availability of grandparents in the home plays a buffering role in the labor supply of parents of children aged 0-5 during the COVID-19 pandemic. The role of grandparents as a childcare resource and its association with parents’ labor supply have received increasing attention in the literature. Limited childcare options during the pandemic underscore the need to investigate how working parents manage the double burden of family and work and what role grandparents could play. I use monthly data from the Current Population Survey (CPS) from January to May 2019 and 2020. Using a propensity score matching method, 6,599 parents in three-generational households were matched to 82,704 parents in two-generational households. Then, I employ a difference-in-difference approach with propensity score matched samples, taking advantage of two sources of variation: an exogenous shock from the pandemic and the availability of grandparents in the home. Parents living with grandparents are 2.90 percentage points more likely to have worked last week and worked 1.36 hours longer during the pandemic relative to parents in a two-generational household. The effects of the availability of coresident grandparents are more pronounced among single and low-educated parents than their counterparts. Results highlight that grandparents played a buffering role in mitigating the adverse impact of the pandemic on parental labor supply. This study sheds light on the importance of grandparental care specifically and informal care and home-based care in general. It also provides policy implications for strengthening the childcare system.