Fertility cost, grandparental childcare, and female employment

This paper considers the role of grandparental childcare in explaining China’s extraordinarily high female labor market participation rate and low wage penalty. Using a novel and high-quality dataset combined with a creative new identification strategy, we find that grandparental childcare reduces young women’s drop-out from the labor market, especially those with a higher education level living in an urban area, and it also improves mothers’ labor income. We further show that grandparents’ marriage status and home location do not affect the feasibility of grandparental childcare. Our research reveals that grandparental childcare, as a remedy for insufficient supply of public childcare services, supports mothers in the labor market, sustaining high mobility in the labor market in China.