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 important source of flexible, low-cost childcare, could have unintended negative consequences for the employment rates of women with young children.
Highlights
IntroductionGiven the progressive population aging in developed countries, increasing female labor force participation (hereafter, LFP) and employment are paramount if Europe is to meet its 2020 target of 75% employment among those aged 20–64, a necessary objective for boosting economic growth and ensuring national pension system sustainability
Given the progressive population aging in developed countries, increasing female labor force participation and employment are paramount if Europe is to meet its 2020 target of 75% employment among those aged 20–64, a necessary objective for boosting economic growth and ensuring national pension system sustainability
We focus on Italy for two reasons: First, its female employment rates are among the lowest in Europe, making it important to identify which factors are hindering the entry of more women into the workforce
Summary
Given the progressive population aging in developed countries, increasing female labor force participation (hereafter, LFP) and employment are paramount if Europe is to meet its 2020 target of 75% employment among those aged 20–64, a necessary objective for boosting economic growth and ensuring national pension system sustainability. Whereas prior to 1992, the 20-year accumulated contribution rule allowed many public sector workers to retire in their 40s or early 50s, since several pension reforms have gradually increased the number of years of contributions required for seniority-based retirement, and raised the minimum age required for age-based retirement to 65 These pension eligibility rules, which vary over time and according to such factors as gender and employment sector, provide an arguably exogenous variation (see Bottazzi et al 2006; Battistin et al 2009, 2015; Aparicio-Fenoll and Vidal-Fernandez 2015) used in this paper to identify the effect of grandparental childcare availability on maternal employment.
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