June 2022

IZA DP No. 15388: Spillover Effects of Old-Age Pension across Generations: Family Labor Supply and Child Outcomes

Katja Maria Kaufmann, Yasemin Özdemir, Han Ye

We study the impact of grandparental retirement decisions on family members' labor supply and child outcomes by exploiting a Dutch pension reform in a fuzzy Regression Discontinuity design. A one-hour increase in grandmothers' hours worked causes adult daughters with young children to work half an hour less. Daughters without children, with older children and sons/daughters-in-law are not affected. We show important long-run impacts on maternal labor supply and on the child penalty. Test score effects are positive for children aged 4-7 (substitution from grandparental to maternal care), and negative for children aged 11-12 (substitution from grandparental to formal childcare).