| Abstract | Postponing retirement age is one of the hot topics in public policy and academic research in recent years. The mandatory retirement age will not only affect the labor participation of the first generation, but also affect the birth timing and labor supply of the second generation. With a declining of public childcare system after China's economic transition, grandparents have become important providers of caring for infants and young children, who are their grandchildren. At meantime, Chinese women have a high labor participation rate and face a severe dilemma of fertility and work. When families (especially women of childbearing age) face birth and work conflicts, whether their parents have time to provide childcare may change the adult children’s choice of birth time. This paper studies to what extent the parents' retirement age has impacts on the birth timing of their adult children, and verify one of the channels is to influence adult children’ labor supply.
Using the data from China Family Panel Studies (CFPS) for 2010, 2012, and 2014 and employing empirical method, the results show that if parents reach the retirement age, females’ fertility rate increases by about 7.5 percentage points than those whose parents have not, while the effect on male is few. By examining the mechanism, we find that women who give birth after the parents retire have a higher labor participation rate than those who give birth before the parents retire. The probability of working more than 8 hours a day is 15.7 percentage points higher, indicating that intergenerational time transfer within the family can alleviate the dilemma of fertility and work for young married women.
The methods employed to identify the impact of parents' retirement age on their adult children’ birth timing are following. (1) In the baseline model, we use the regression discontinuity method. The key explanatory variable is whether at least one of the parents reaches the retirement age. The dependent variables include two aspects: one is whether the child is born in the survey year and the last year, the other is the labor supply of the adult children (including employment status, whether the working time reaches 8 hours or not, wage). The regression also controls personal characteristics of adult children like the education level, Hukou status and age. We examine the effects retirement of parents, spouses’ parents and parents or spouses’ parents. (2) In robustness check, we have more tests, i.e., adjusting the estimation bandwidth, doing instrumental variable (IV) estimation，having a falsification test, setting the discontinuity of retirement at different age as placebo test. (3) We check for heterogeneity effects based on whether the young child is born as the first child, the education attainment of the parents, and the number of retired parents in the family. We find that if the parents have lower education attainment, their reaching retirement age has a more significant and greater impact on second generation’s birth timing. The retirement effect is bigger on the first birth grandchild. Besides, once one of the parents retired, the rest of the parents’ retirement have little effect on adult children’ birth decision.
There are several contributions of this paper. First, we examine the effects of parents retirement on the children’ fertility behavior, while the existing research investigates the influence on the labor supply of the adult children. Second, we employ China's exogenous retirement age policy to avoid endogenous problems. Thirdly, this paper pays has more policy implications. We have chosen the sample of the grandparents covered by the social pension insurance system, so we can raise the issues that need to be paid attention to in the reform of the retirement age policy facing China.
During population aging, postponing retirement age and encouraging fertility are both critical在policies to counter the negative demographic structure. Findings of the paper imply that the two policies might contradict with each other. There are two related policy implications. One of the choices is to provide more public child care facilities to mitigate cost of having a child for women. In the future, it is necessary to consider include child care into basic public service schemes. The other important reform is to change the inflexible retirement age policy by providing more options, for example, setting up both “eligibility age for pension” and “retirement age from labor market”.
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