Intergenerational care: The effects of being a grandparent on labor market participation

• In Event: Aging and Intergenerational Supports: Economic and Care Resources Across Generations

Abstract

The birth of a child typically involves increased expenses and decreased family income, often through reductions in mothers’ earnings and labor force participation (Stanczyk, 2020). Among low-income and single mother households, the increased household expenses and reduced labor income increases the risk of poverty and use of various forms of public assistance (Heflin et al., 2024). Because the social safety net in the U.S. does not meet all needs and can be burdensome and slow to access, new parents often seek additional financial and in-kind support from their own parents such as housing and child care, which help new parents remain attached to the labor force (Amorim, 2019; Pilkauskas et al., 2017). Demands to help their adult children transition to parenthood may have direct effect on labor force behavior on new grandparents. Providing their adult children with financial resources may dissuade some nearing retirement to exit the labor force; others may choose to retire early to help provide child care (Wang & Marcotte, 2007; Lumsdaine & Vermeer, 2015). Alternatively, grandparents may require care themselves due to their own health needs (Arora & Wolf, 2024).

 

Most research on the transition to “grandparenthood” uses cross-sectional data; therefore, we know little about longitudinal patterns and characteristics of grandparents or how becoming a grandparent affects one’s economic well-being. Further, the American Community Survey, commonly used to study grandparents, provides information on grandparent caregiving only for those who co-reside with their grandchildren. Given the dramatic change in family structure and the social safety net over time, understanding how the presence and characteristics of multigenerational families change over time is important to understanding the broader role they play in families and the economy.

 

In this paper, we use longitudinal, multi-generational data from 2001 to 2019 from the Panel Study of Income Dynamics (PSID) to accomplish two research aims: first, describe the propensity, spell length, and socioeconomic, racial, ethnic, and regional differences in co-residence patterns; and second, to estimate the effect of co-residing with a grandchild on labor force participation and earnings. We use multigenerational PSID data to examine how having a grandchild (G3), co-residing or otherwise, affects the employment status, hours worked, earnings, and retirement of grandparents (G1), controlling for a large set of economic, demographic and family structure covariates. We examine heterogeneity by the gender of grandparents (G1) and adult children (G2); the age of G3, G2, and G1; household structure; and race, ethnicity, and socioeconomic status of the grandparent. Our data are at the grandparent and household levels, enabling us to estimate separate effects for grandmothers and grandfathers.

 

Preliminary results indicate that being a grandparent reduces earnings; indeed, being a grandparent has a larger effect on earnings relative to dropping out of labor force all together, consistent with working fewer hours. These effects on earnings are larger if grandparents reside with their grandchildren, and for women and Black grandparents, and among relatively young grandparents (45 – 54 years old).

Authors

• Victoria Hunter Gibney, Center on Budget and Policy Priorities
  Non-Presenting Co-Author

• Dave Marcotte, American University
  Non-Presenting Co-Author

• Taryn W. Morrissey, American University
  Presenting Author