Grandparental availability for child care and maternal labor force participation: pension reform evidence from Italy

Abstract

In this paper, we exploit pension reform-induced changes in retirement eligibility requirements to assess the role of grandparental childcare availability in the labor force participation of women with children under 15. Our analysis shows that, among the women studied, those whose own mothers are retirement eligible have a 11% higher probability of being in the labor force than those whose mothers are ineligible. The pension eligibility of maternal grandfathers and paternal grandparents, however, has no significant effect on the women's labor force participation. We also demonstrate that the eligibility of maternal grandmothers mainly captures the effect of their availability for childcare. Hence, pension reforms, by potentially robbing households of an J Popul Econ https://doi.org/10.1007/s00148-017-0683-7

Family labor participation and child care decisions: the role of grannies

“…Similarly, Battistin et al (2015), using also data from Italy, found that delayed retirement due to pension reforms led to a reduction in the probability of mothers participating in the labor market but only for later ages. Similarly, Bratti et al (2018) found a positive and significant effect on the labor supply of mothers if they have a grandmother that became eligible for retirement pensions. Finally, Aparicio Fenoll (2018) uses data from SHARE and differential pension eligibility retirement ages across countries to study whether the effect of grandmothers' retirement on daughters' labor participation varies by country depending on its family policies.…”

“…Here I exploit SERIEs the fact that I have information about multiple offspring with children for most grandmothers. In line with recent work that used eligibility ages for retirement as external instruments for grandmothers ' labor participation (see Aparicio Fenoll and Vidal-Fernandez 2015;Aparicio Fenoll 2018;Battistin et al 2015;Bratti et al 2018), I use the information on eligibility for early retirement as an exclusion restriction to aid identification of the empirical model. I find a negative and significant effect of participating in the labor market on the probability of working-age grandmothers of taking care of their grandchildren on a regular basis.…”

The Age Pay Gap and Labour Market Heterogeneity: A New Empirical Approach Using Data for Italy

“…At the same time, we observe a decentralization process of collective bargaining and public employment in Italy (Bordogna and Neri, ; Russo, ). These factors may affect the cohorts differently (Bratti et al ., ; Contini and Trivellato, ) and more flexible wage‐setting mechanisms may result in wage premiums of generally unobserved characteristics at the individual level such as motivation or commitment to work. Since the 1990s several labour market reforms in Italy aiming at the creation of a more flexible labour market resulted in a dual labour market along the age‐dimension (Contini and Trivellato, ; Bratti et al ., ).…”

“…Hence, wage dispersion between cohorts represents a potential source of social conflict in Italy. Since the 1990s, several labour market reforms in Italy aiming at the creation of a more flexible labour market resulted in a dual labour market along the age dimension (Contini and Trivellato, ; Bratti et al ., ). Entry wages were reduced and hiring was made more flexible (leading to an increase in temporary contracts).…”

“…The debate can be summarized by the perception that Italy is a country of the elder. In the past, early retirement was used as an instrument to resolve economic crises in Italy (Disney, ; Barbieri, ; Bratti et al ., ) leading to a relative low share of elder workers in the Italian labour market compared with other OECD countries (OECD, ). This policy has also made the Italian pension system one of the most expensive and thereby increased the burden on the younger generations to prevent the social security and pension system from collapsing.…”