NEW REPORT: Grandparent childcare can exacerbate problems relating to the sustainability of social security systems in developed countries

A timely new report being published tomorrow (Thursday, 2 March) on IZA World of Labor finds that grandparent childcare helps working mothers, but reduces the labor supply and income of older women

Parents participating in the labor market in developed countries make extensive use of grandparent-provided childcare arrangements. In a new report economist Giulio Zanella of the University of Bologna quotes a recent study which shows that one in four children between zero and five years of age in OECD countries are recipients of informal childcare arrangements. While these arrangements help young parents to reduce the cost of bringing up children and thus boost the labor supply of young mothers, they come at the expense of older workers’ labor supply.

Evidence suggests that the availability of grandparents willing to supply childcare time mitigates the negative consequences of childbearing on the labor supply of young parents, especially mothers. Grandparent-provided childcare increases the participation rate (both full- and part-time) of young mothers in the US, for example, by a considerable 9%.

But European and American grandmothers have grandchildren at a relatively young and (working-) age: at about 53 years old in the UK, France, and Italy, 52 in Germany, 55 in Spain, and 48 in the US. Time transfers from working-age grandparents to younger parents, in the form of grandparent-provided childcare, are substantial both in the US and Europe. A recent European study on individuals who report spending time on primary childcare duties shows that women average 657 childcare hours annually and men 501. These numbers equate to approximately 19 and 14 full-time work weeks, respectively. Research from the US indicates that a quarter of the childcare time provided by grandparents is at the expense of labor supply in particular for US grandmothers (and their income).

Therefore, Zanella argues there is a trade-off between grandparent-provided childcare by senior workers and their own labor supply, particularly when the potential unsustainability of living off welfare and pension provision is taken into account. This trade-off should be considered when designing retirement, family, and taxation policies. For example, the provision of affordable, formal childcare arrangements may help young parents to remain attached to the labor market without weakening grandparents’ work incentives.

Media Contact:
Please contact Anna von Hahn for more information, author interviews or if you would like to read the full report in advance of publication: anna.vonhahn@bloomsbury.com or +44 7852 882 770

Notes for editors:

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