Effects of Grandmothers' Proximity on Mothers' Labour Force Participation*

Abstract

This paper investigates the causal effects of grandmothers' geographical proximity on labour supply decisions of married women with young children by leveraging a novel data set from Turkey. We deal with the reverse causality and endogeneity problems arising from mothers' and grandmothers' joint location and labour supply decisions by implementing a two‐stage least squares estimation method using the number of alive grandmothers as an instrument. We argue that grandmothers' proximity can increase mothers' labour supply through their free and flexible childcare services. On the other hand, geographically close grandmothers can reduce mothers' labour supply by imposing the traditional gender norms prevalent in Turkey or requiring them to take on elderly caregiving duties. The overall effect depends on the relative size of these opposing factors. Our findings suggest that living in the same neighbourhood as grandmothers increases the probability of labour force participation and the employment rates of women with young children by 18.2 ppt and 16.4 ppt, respectively. These results are mostly driven by the non‐village sample. The ‘traditional gender norm’ channel explains the insignificant impact of grandmothers' proximity on the labour market outcomes of mothers who have been raised in villages.