Grandmothers' labor supply

Becoming a grandmother significantly increases the probability of labor market exit.

Becoming a grandmother significantly increases the probability of labor market exit.

Rudolf Winter-Ebmer is Professor for Labor Economics at the University of Linz, Austria and Research Professor at the Vienna Institute for Advanced Studies. Rudolf received a Ph.D. in Economics in 1991 and a Habilitation degree from the University of Linz in 1996. In 1995-96 he was Visiting Scholar at the Institute for Industrial Relations at UC Berkeley and 1998 Visiting Professor at the University of Graz, he has lectured in Zurich, Innsbruck and Vienna. Since 1992 he has been Research Affiliate and later Research Fellow at the Centre for Economic Policy Research, London. From 1998-2004 he served the European Society for Population Economics (ESPE) as Secretary and later as President, he is a member of the section on population economics of the "Verein für Socialpolitik". He is also coordinator of the "Austrian Center for Labor Economics and the Analysis of the Welfare State" as well as the Austria Country Team Leader for SHARE (Survey on Health, Aging and Retirement in Europe).

His interests lie in the areas of microeconometric labor market research and include topics such as unemployment, wage formation, education, inequality, discrimination, migration and economics of aging.

In the frame of his fields of expertise, Prof. Winter-Ebmer has been invited by our platform « seminars and guest programm ». He decided to present a paper he is writing with two others authors* titled: « Grandmothers' labor supply ».

In his presentation he explains that the birth of a child may have (negative) consequences on labor supply of the mother or the parents in general - but also on labor supply of the grandmother. Non-availability of formal child-care may force the extended family to bargain whether the mother, the father or the grandmother is taking a leave to care for the child. While the joint determination of mother's labor supply and fertility decisions is well studied in the literature, a thorough causal analysis of labor supply effects of becoming a grandmother is practically non-existent. We will use administrative data covering the universe of Austrian workers and two different identification strategies to explore causal effects of having a first grandchild vs. having an additional one. We find that becoming a grandmother significantly increases the probability of labor market exit. Similarly, having an additional grandchild reduces labor market participation. Such an analysis is important, because it investigates side-effects of the existence of formal child-care facilities on labor supply and early retirement behavior of elderly workers in times of serious demographic pressure on public pensions systems.

* Martin Halla and Bernhard Schmidpeter