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Can we ask grandma to watch the kids?

The effect of grandchildren on grandparental labour supply and the gender employment gap

Andreas Backhaus (BiB) and Mikkel Barslund (HIVA-KU Leuven) use SHARE data and an instrumental variable strategy to estimate the causal effect of grandchildren on the labour supply of grandparents.
African descent grandmother and grandchild gardening in outdoor

Source: Anna Frank

Grandchildren often play an important role in the lives of their grandparents. Data from the Survey of Health, Ageing and Retirement in Europe (SHARE) for ten European countries (i.e. Austria, Belgium, Denmark, France, Germany, Italy, the Netherlands, Spain, Sweden, and Switzerland) indicate that 23% of grandmothers between age 55 and 64 care daily for at least one grandchild, while 15% of grandfathers do the same. To what extent does the time that grandparents spend caring for their grandchildren affect the grandparental working lives?

A recent article in the European Economic Review by Andreas Backhaus (Federal Institute for Population Research (BiB)) and Mikkel Barslund (HIVA-KU Leuven) sheds light on this question. The authors use SHARE data and an instrumental variable strategy to estimate the causal effect of grandchildren on the labour supply of grandparents.

The key finding is that grandchildren have a large negative effect on the employment of grandmothers, while the labour supply of grandfathers is not significantly affected. Grandmothers further transfer more gifts to their descendants once grandchildren arrive, while grandfathers do not exhibit this response. Further investigations suggest that the significant and large negative effect on grandmothers can be generalized beyond the study’s quasi-experimental framework; it may account for up to 88% of the employment gap between men and women at age 55-64 across the European sample countries.

The results point to an intergenerational trade-off for working women in Europe: grandmothers who leave employment for the sake of taking care of grandchildren may allow the mothers of the grandchildren to increase their labour supply again after having given birth, thereby narrowing the gender employment gap at prime working age. However, this may come at the cost of a larger gender employment gap at later working age. A potential remedy to this trade-off could be an expanded provision of public childcare to allow both mothers and grandmothers to remain employed for extended periods. Indeed, the involvement of grandmothers in grandchild care is particularly pronounced in those European countries where the enrolment of young children in non-family childcare is at the lowest level, as the study highlights; however, whether this pattern is primarily the consequence of constrained supply or weak demand for non-family childcare is a question for future research.