The Effects of Parental Retirement on Adult Children’s Labor Supply: Evidence From China

Qi Wu and Xin Gao

MPRA Paper from University Library of Munich, Germany

Abstract: Aging and an increasing retired population are a global challenge. Previous studies suggest that retirement affects economic behaviors of the retiree and his or her spouse, including consumption, health outcome, and time use. However, little is known about the intergenerational effects of parental retirement on adult children. This paper studies the effects of parental retirement on adult children's labor supply through intergenerational time and monetary transfer. We exploit the mandatory retirement age in China as the cut-off point and apply a regression discontinuity (RD) approach to four waves of the China Family Panel Studies (CFPS) Dataset. Our findings suggest that parental retirement reduces adult children's annual hours of labor supply by 3 to 4 percent. This reduction is especially pronounced for female children. We find that the reduction can be explained by parents' increasing demand for time and care from children due to the significant drop in parents' self-rated health upon retirement. Although both male and female children increased their monetary and time transfers to parents, we find that parents tend to make more transfers to sons compared to daughters. Daughters are also more likely to make transfers to parents after they retire, both in terms of money and in terms of time. We therefore urge policy makers to increase formal eldercare provisions and provide workplace amenities such as flexible working hours, especially for female employees.

Keywords: Retirement; Labor Supply; Intergenerational Transfer; Gender Role (search for similar items in EconPapers)
JEL-codes: D13 D64 J0 J22 J26 (search for similar items in EconPapers)
Date: 2020-10-23
New Economics Papers: this item is included in nep-age, nep-cna, nep-dem, nep-hea, nep-ias and nep-lma
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Citations: View citations in EconPapers (1)

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