Working Women and Fertility: the Role of Grandmothers� Labor Force Participation

-fenoll, ainhoa aparicio ; fernandez, marian vidal;

Grandmothers� availability for childcare has been shown to increase the labor force participation (LFP) and fertility of daughters. However, grandmothers� childcare availability depends highly on their LFP. When grandmothers work, intergenerational income transfers to their daughters may increase at the expense of time transfers (through childcare). Using a Two-stage Two-steps Least Squares estimation, we exploit changes in legal retirement ages in Italy to explore the relationship between mothers� LFP and daughters�
LFP and fertility choices. We show that even though grandmothers who participate in the
labor force provide less childcare, their daughters are more likely to have children and less
likely to participate in the labor force. This can be explained by the increase in family
income as a result of mothers� LFP offsetting the influence of the reduction in childcare.