Grandchild Care and Female Labor Supply: Evidence from a Universal Child Care Program in China

Abstract

As an important employment supportive policy, the impact of universal and subsidized child care on the mothers and children has aroused extensive concern in the research community. However, little is known about how grandmothers respond to easier accessibility to public child care. This paper fills the gap by evaluating the effect of increasing accessibility to formal child care facility on female labor supply from the perspective of grandchild care. Utilizing the first universal child care program in China, we develop a Differences-in-Differences strategy to identify the causal effect. Exploiting the variation in child care facility expansion intensity across provinces and over years, we find that the universal child care has a strong and robust positive effect on promoting labor force participation of the female aged 40 to 60 with preschool grandchildren, while the male are not influenced. Further investigation into the hours worked per week suggests that the effect is mostly at extensive margins while rarely at intensive margins. Moreover, the effect is more significant for individuals from higher-income family, with higher educational attainment, and to join in the wage-earning sector.