The effect of grandchildren on grandparental labour supply: Evidence from Europe

Grandparents spend a considerable amount of time taking care of their grandchildren. For grandparents still at working-age, these time transfers might imply relevant economic trade-offs with regard to the participation in the labour market. Using an instrumental variable strategy and multiple waves of the Survey on Health, Ageing and Retirement in Europe, we estimate the causal effect of grandparenthood on the labour supply of working-age grandparents in nine European countries. In our preferred specification, we find a large negative impact of grandparenthood on the labour force participation of women aged 55 to 64. By contrast, the intensive margin in terms of hours worked is unaffected. Male labour supply does not significantly adjust in response to grandparenthood. Complementary to their time transfers, grandmothers also transfer more gifts to their descendants than women who do not have grandchildren.