Stay at Home with Grandma, Mom Is Going to Work: The Impact of Grandmothers’ Retirement on Mothers’ Labor Decisions

Maria Florencia Pinto

Economic Development and Cultural Change, 2023, vol. 72, issue 1, 283 - 327

Abstract: Grandparents are an important source of childcare, especially when formal childcare supply is low. In this paper, I explore whether grandmothers’ retirement affects their daughters’ employment when they have young children. I exploit a pension reform in Argentina that induced an arguably exogenous variation in grandmothers’ retirement decisions. I find that mothers of young children coresiding with retirement-eligible grandmothers are significantly more likely to participate in the labor market and to be employed, and the effects are large. Although I find suggestive evidence that the underlying mechanism is an increase in grandmothers’ time availability, I cannot fully rule out an income effect. Also, I find no evidence that the policy affected fertility or household composition.

Date: 2023
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