The Effect of Formal Child Care on Intergenerational Transfer: Evidence from China and the UK

• In Event: The Role of Family and Generational Impacts in Chinese Education

Proposal

Gerontology scholars have become increasingly worried about the trend of getting old before getting rich in the developing world (Johnston, 2021). Given the high cost of direct policies and interventions for elderly care, a few researchers have started to envision utilizing indirect policies and interventions as a better means to address the needs of an aging society (Donovan & Blazer, 2020). Indirect policies and interventions may target other generations and cohorts instead of the elderly population itself, but ultimately benefit the older population by changing the dynamics of intrahousehold resource allocation. The expansion of Early Childhood Education and Care (ECEC), in particular, can have spillover effects on the older generation by changing how multigenerational households make decisions about financial, time, and labor transfers. For instance, institutionalized child care can shrink the gender gap in employment of middle-aged and older adults since grandmothers are much more likely to provide help and care than grandfathers in many regions around the world (e.g. Di Gessa et al., 2020; Marcos, 2023).
This paper focuses on China, a country with rapidly changing demographics due to the aging population and the relaxation of the one-child policy. Such changes necessitate a reimagination of family, child care, and elderly care policies to better serve the needs of the population. The Chinese government has extensively promoted institutional child care since 2010, when ECEC was included in China’s national development plan for the first time (Lin & Wang, 2019). Most of the ECEC expansion effort focused on expanding children’s access to preschools, and therefore this paper will focus on preschools as the main sites for the policy implementation. The expansion of preschools is likely to have complex social implications on intergenerational dynamics in China, where child care is traditionally home-based and also involves both parental and grandparental involvement. However, few studies have examined the cross-generational impact of the preschool expansion. In addition, existing studies have not established causality between the policy and its potential impacts (e.g. Chen & Zhou, 2022). Current literature also tends to limit their discussions to grandparental outcomes rather than examining intergenerational dynamics more broadly (e.g. Lin & Wang, 2019).
The study considers the differing theories to explain the relationship between child care and elderly care to formulate the research questions. Some scholars argue for a competing demand hypothesis, which holds that child care needs and elderly care needs compete for family resources, and the sandwich generations have to prioritize one over the other due to budget constraints (Cong & Silverstein, 2019; Chen & Zhou, 2022). This theory suggests that institutional child care may reduce the financial and time burden of the sandwich generation, enabling them to allocate more family resources and time to elderly care. On the contrary, others argue for the family solidarity theory and contend that the two types of caregiving are positively correlated (Bengtson & Roberts, 1991; Attias-Donfut, 2003). This theory has been supported by empirical evidence (e.g. Liu et al., 2020). The family solidarity theory suggests that when child care responsibilities no longer tie generations together, the normative integration and affection between generations decrease overall (Bengtson & Roberts, 1991). Due to less frequent interactions and weaker relationship ties with their parents, the sandwich generation may provide less support financially or timewise to their elderly parents. In light of these two contesting theories, it remains unclear how child care policies such as an expansion of preschools may impact how the sandwich generation provides support for grandparents.
Given these gaps in the literature, this study has two objectives. The first is to examine how the expansion of preschools impacts time and financial transfers between grandparents and parents. The second is to examine whether these impacts are heterogeneous by gender and rurality. To fulfill these objectives, I analyze data from China Health and Retirement Longitudinal Study (CHARLS) using a difference-in-differences (DID) approach. Specifically, I use family-level and yearly variations in the exposure to the expansion of preschools in China from the 2010s to estimate the effects on time and financial transfers between parents and grandparents. The DID model in this paper compares individuals in families with at least one child aged 3 or 4 (treated families) with those in families with at least one child aged 2 (control families) since age 3 is when children become eligible for most preschool programs in China. Assuming that having a 2-year-old child and a 3- or 4-year-old child brings similar demands to the adult family members, the identification strategy attempts to compare families similar in terms of unobserved characteristics. I use linear regression models for all dependent variables. I did not use logit models for binary dependent variables following the recent argument by Gomila (2021) that linear regression is generally the best approach for estimating causal treatment effects on binary outcomes, especially when fixed effects are included.
Controlling for a vector of covariates and the individual- and year-fixed effects, results indicate that an expansion of preschools decreases the time transfer from parents to grandparents, particularly for grandmothers. However, the study finds no significant impact of the policy on financial transfer between parents and grandparents. These effects do not differ by rurality.
The contribution of the paper is twofold. Firstly, the study contributes to the limited literature on the causal impact of the policy of expanding preschool coverage employing quasi-experimental methods in the context of China. Secondly, by linking child care policies with elderly care outcomes, this work provides a new perspective to understand how child care intervention policies may have concurrent implications for aging societies around the world.
The paper topic is particularly relevant to the field of comparative and international education for its focus on the expansion of early childhood education in a unique national context where the policy implication can be complicated due to the norm of multigenerational families, shared child care responsibilities across generations, and the rapidly aging demography.

Author

• Zerui Tian, University of Oxford