The Impact Of Intergenerational Support On Elderly Labor Force Participation In Urban China

With a rapidly growing aging population, the issue of extending retirement age has been attracting more and more attention in China these years. However, most of the current researches mainly focus on social security and the elderly personal characteristics, paying little attention to the household structure and intergenerational relationship that may have a significant influence on the elderly labor supply decisions as well. Nowadays, elderly parental support is quite prevalent in China. It is common that parents continue to support their grown-up children in the forms of money and time transfer. Providing transfers to children would intuitively affect the engagement in labor market of the parents themselves. Therefore, this paper focused the impact of intergenerational support on elderly labor force participation behavior, especially paying attention to the role of children structure in this process.Using the sample of urban population aged 45-64, driven from the data of China Health and Retirement Longitudinal Study (CHARLS), this paper first analyzes the characteristics of the elderly labor force participation, especially paying attention to their children structures. To find out whether the structure of children has a significant impact on their aged parents’labor supply behaviors, this paper further investigates several regressions using the probit model and a non-linear multilevel model for regional heterogeneity. The empirical result shows that the total number of children has a significant negative effect on elderly labor force participation, while the number of sons would eliminate this effect.Based on the phenomenon explored above, this study wants to find out how children structure works on elderly labor force participation from the perspective of intergenerational support. We take both parental monetary support and time support into account, aiming to find out each support’s effect on elderly employment and whether parental support differ in different children structures(number and gender composition). We employ a random effect model for panel data analysis to control the individual heterogeneity bias. To deal with the potential endogenity of parental transfers on their employment behavior, we further adopt the methods of probit model instrumental variables as well as simultaneous equations for robustness, estimating the effect of monetary support, time support and elderly labor force participation systematically. The analytical result shows that the differences of children structure will affect the intergenerational support in the way and the intensity, thus affecting elderly labor participation behavior: ①Intergenerational monetary support has a significant positive effect on elderly labor force participation, while parental time support has a significant negative effect. ②The total number of children has a significant negative effect on intergenerational time support, while the number of sons would eliminate this effect. The number of sons also plays a significant role in increasing parental monetary support.③Compared to a daughter in family, a son is more likely to receive intergenerational support in the forms of monetary support and time support.④There is a significant positive correlation between parental time support and monetary support. The final impact of intergenerational support on elderly labor participation depends on both the relative effect.Based on the research, this paper further propose some suggestions from the perspectives of providing social formal childcare services, developing education systems and broadening channels of economic support for young generation. In this way, the pressure of young generation can be removed from their parents. Thus the elderly population can make decisions on their own will.