Grandmothers' Labor Supply

43 Pages Posted: 27 Dec 2017

See all articles by Wolfgang Frimmel

Wolfgang Frimmel

University of Linz

Martin Halla

Johannes Kepler University Linz - Department of Economics; IZA Institute of Labor Economics

Bernhard Schmidpeter

University of Essex

Rudolf Winter-Ebmer

Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

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Abstract

The labor supply effects of becoming a grandmother are not well established in the empirical literature. We estimate the effect of becoming a grandmother on the labor supply decision of older workers. Under the assumption that grandmothers cannot predict the exact date of conception of their grandchild, we identify the effect of the first grandchild on employment (extensive margin). Our Timing-of-Events approach shows that having a first grandchild increases the probability of leaving prematurely the labor market. This effect is stronger when informal childcare is more valuable to the mother. To estimate the effect of an additional grandchild (intensive margin), we assume that the incidence of a twin birth among the third generation is not correlated with unobserved determinants of the grandmother's labor supply (first generation). Our respective 2SLS estimation shows a significant effect of further grandchildren. Our results highlight the important influence of the extended family on the decisions of older workers and point to mediating effects of different institutional settings.

Keywords: grandchildren, female labor supply, timing of events, instrumental variables

JEL Classification: J13, J14, J22

Suggested Citation

Frimmel, Wolfgang and Halla, Martin and Schmidpeter, Bernhard and Winter-Ebmer, Rudolf, Grandmothers' Labor Supply. IZA Discussion Paper No. 11199, Available at SSRN: https://ssrn.com/abstract=3092523 or http://dx.doi.org/10.2139/ssrn.3092523

Wolfgang Frimmel (Contact Author)

University of Linz ( email )

Altenbergerstr. 69
A-4040 Linz, Uper Austria 4040
Austria

Martin Halla

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Bernhard Schmidpeter

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom

HOME PAGE: http://https://sites.google.com/site/bernhardecon/

Rudolf Winter-Ebmer

Johannes Kepler University Linz - Department of Economics ( email )

Altenbergerstrasse 69
A-4040 Linz, 4040
Austria
+43 732 2468 8236 (Phone)
+43 732 2468 8238 (Fax)

HOME PAGE: http://www.econ.jku.at/winter

Institute for Advanced Studies (IHS) - Department of Economics & Finance ( email )

Stumpergasse 56
A-1060 Vienna, A-1060
Austria

HOME PAGE: http://www.ihs.ac.at

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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