The Effect Of Intergenerational Childcare On Birth And Labor Supply In China

Recently,in the context of growing population aging in China,the falling birth rate and the decreasing labor supply are becoming a pressing issue that needs to be resolved for China.Specifically,population aging,a shift in the population distribution towards older ages,directly results in a reduced proportion of the working-age population;the continuously declining fertility rates will further result in a decrease in the proportion of the working-age population in the long term.The incompatibility of time allocation between labor supply and child care for mothers makes it challenging to simultaneously boost fertility and labor supply,especially maternal labor supply.Although infant and child care services is a favorable solution for this problem,China is facing a shortage of child care services and inferior quality of childcare service.Therefore,investigating the impact of informal childcare,such as grandparental childcare,on fertility and labor supply is valuable.Since giving birth to more children and participating labor force are correlated,identifying the impact of grandparental childcare on fertility decisions and labor force participation is complicated.In the theoretical aspect,this study develops a dynamic general equilibrium(DGE)model that is calibrated to match some stylized facts of China’s population.To identify the total effect of intergenerational childcare on the number of births and the working hours,we compared the econometric models with or without grandparental childcare.We also introduced a DGE model with a fixed number of births,with which we can identify the direct impact of grandparental childcare on working hours.Beyond the theoretical study,we conducted empirical studies based on data from the China Migrants Dynamic Survey(CMDS)2016 and 2017,aiming to obtain results that are in line with China’s realities.Given the correlation between giving birth to more children and participating labor force,we employed mediation analysis and endogenous switching probit model for data analysis.The main results in this study are as follows,(1)The theoretical study using a DGE model with the number of births as an endogenous variable shows that,although grandparental childcare can boost the number of births and indirectly increases the working load of parenting,grandparents can directly share the parenting workload of the parents.As a result,the total effect of grandparental childcare on the working hours of parents is positive.Based on the model with a fixed number of births,it can be seen that grandparental childcare can directly boost the working hours of parents.Therefore,grandparenting is a crucial factor that can simultaneously boost the number of births and working hours of parents.(2)The empirical study about the impact of grandparental childcare on the birth of a second child shows that when the grandparents are the primary care providers for the first child,young couples are more likely to give birth to a second child.By controlling the endogeneity of maternal labor participation with an endogenous switching probit model,we have found that grandparental childcare always has a positive and significant impact on the second child’s birth regardless of whether the mother participates labor market or not.Moreover,we have found that maternal labor force participation negatively impacts the birth of the second child.When the first child is left behind and taken care by the grandparents,the migrant couples are more likely to have one more child.These empirical results demonstrate the positive impact of grandparenting on fertility,regardless of whether the mother participates labor market or not.(3)The empirical study about the impact of grandparental childcare on labor supply shows that grandparental childcare for the first child can promote the birth of a second child and restrain maternal labor participation,which indicates that the mediate effect is negative;at the same time,it can directly promote labor participation due to the shared parenting workload.However,with the effect of the two aspects,the total effect of grandparental childcare on maternal labor participation is positive.With the first child taken care by grandparents,the mothers not only can extend their working hours,but also have more chance to give birth to a second child,which will in turn increase the financial burden and indirectly enforce the working mothers to extend their working hours.Grandparental childcare can also promote the labor supply of the fathers.However,this promotion effect is much weaker.The promotion effects of grandparental childcare on labor supply in both agricultural population and non-agricultural population are significant.However,the promotion effects of grandparental childcare on working hours are only significant for agricultural population.In conclusion,grandparental childcare can simultaneously boost the birth of a second child and increase labor supply.Therefore,it has positive effect on the short-term promotion and the healthy long-term development of labor supply.This study calls on attaching more attention and support to grandparenting,and encourage the co-migration of the children and grandparents with the migrant parents.More efforts should be made to promote off-site medical care service for migrant grandparents and high-quality infant and child care service.