Retirement and Grandchild Care in Urban China

ABSTRACT

This study estimates the causal effect of retirement on grandchild care in urban China. It utilizes the exogenous variations in retirement status caused by China’s mandatory retirement-age policy. Drawing on the data of individuals close to retirement age from the 2011 and 2013 waves of the China Health and Retirement Longitudinal Study (CHARLS), the analysis shows a statistically significant increase of 29 percentage points in the provision of grandchild care after the transition to retirement for women and a 21 percentage-point increase for men. Moreover, the study finds that grandchild care is demand driven for men and supply driven for women. It also finds that women with lower education levels have a lower probability of retirement after reaching eligible age but are more likely to provide grandchild care after retirement.

KEYWORDS:

• Grandchild care
• regression discontinuity
• retirement eligibility
• China

JEL Codes:

• J13
• J26

Acknowledgments

This work is supported by the National Science Foundation of China (71573052), the International Development Research Center of Canada (IDRC) project “Care Economy, Inclusive Growth, and Gender Equality in China” (107579), and the China Scholarship Council. We are grateful to the participants in the workshop “Gender, Inclusive Growth and Care Economy in China” for their valuable comments.

Notes

1 China also has a special arrangement for the military. Military personnel do not make any contributions toward their pension benefits. They usually receive higher remuneration and pension payments than civil servants of equivalent rank. Both military cadres (including officers and non-ranking officers) and soldiers (excluding volunteers) can retire from the army with entitlement to a monthly military pension after transition to retirement as long as certain criteria are met. Military personnel can also transfer to the civil or public sectors or enterprises before retirement while receiving a certain amount of compensation.

2 Technically, employees in an urban sector within rural hukou can be covered, but it is harder to know the real situation. Based on coverage criteria (1)–(4), the share of individuals in rural hukou that are paid workers is almost four times as high as that of retirees, which is not reasonable. To avoid confusion, we drop those individuals in rural hukou.

3 We use 50 as the retirement age in all of the samples to create the instrument variable and obtain similar results.

4 In the sample of covered women, 40 percent of individuals are not retired and do not provide care, 5 percent are not retired and provide care, 36 percent are retired and do not provide care, and 19 percent are retired and provide care. The retired respondents are more likely to provide care than not to provide care. The non-retired respondents are more likely not to provide care than to provide it. The sample of men shows a similar pattern.

5 As the retirement age for women is relatively young, their children are younger. The age at which young parents birth their first child has been delayed due to the one-child policy (Zhao and Kohler 2016). As such, the fertility decisions of their children are likely to increase the number of grandchildren from zero to one instead of from a non-zero base.

6 The results specific to each type of household identified by educational attainment are also very robust to these controls. These results are available upon request.

7 The reduced-form results of the main sample have the same significance and magnitude patterns as the two-stage results. They are available upon request.

Additional information

Notes on contributors

Jin Feng

Jin Feng is Professor of Economics at Fudan University and Dean of Faculty of Public Economics. She is also Vice Director of the Employment and Social Security Research Center at Fudan University. She was Visiting Scholar at the University of Michigan, University of Amsterdam and Tinbergen Institute, Bank of Finland (BOFIT), and University of Paris. Her publications and research interests focus on social security reforms, health insurance, healthcare, and domestic care in China.

Xiaohan Zhang

Xiaohan Zhang is Assistant Professor of Economics at California State University, Los Angeles. She is also Research Scholar at the Pat Brown Institute for Public Affairs and serves as Managing Editor of Business Forum. Her research focuses on the formation of health capital and the health–productivity nexus.