Working Paper: NBER ID: w20756
Authors: Robin L. Lumsdaine; Stephanie J.C. Vermeer
Abstract: This paper considers the potential relationship between providing care for grandchildren and retirement, among women nearing retirement age. Using 47,400 person-wave observations from the Health and Retirement Study (HRS), we find the arrival of a new grandchild is associated with a more than eight percent increase in the retirement hazard despite little overall evidence of a care/retirement interaction. We document that while family characteristics seem to be the most important factors driving the care decision, they are also important determinants of retirement. In contrast, while financial incentives such as pensions and retiree health insurance have the largest influence on retirement, the opportunity cost associated with outside income seems to have little effect on whether or not a grandmother provides care. There is little evidence of substitution between caring for grandchildren versus providing care for elderly parents or engaging in volunteer activities; grandchild care is instead taken on as an additional responsibility. Our findings suggest that policies aimed at prolonging worklife may need to consider grandchild care responsibilities as a countervailing factor while those policies focused on grandchild care may also affect elderly labor force composition.
Keywords: retirement; care responsibilities; grandchildren; women; labor force participation
JEL Codes: J12; J13; J14; J22; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| arrival of new grandchild (J13) | retirement hazard increase (J26) |
| arrival of new grandchild (J13) | likelihood of providing care increase (I11) |
| family characteristics (J12) | decision to provide care (I11) |
| family characteristics (J12) | retirement decisions (J26) |
| financial incentives (M52) | retirement decisions (J26) |
| outside income opportunity cost (G19) | grandmothers' caregiving choices (D13) |
| caring for grandchildren (J13) | other caregiving responsibilities (J13) |