Elderly labor supply, endogenous grandparental childcare, and fertility in an OLG model

Abstract

This paper explores how grandparental childcare influences fertility decisions, elderly labor supply, and economic development. We model the time elderly individuals allocate between work and caring for grandchildren. In high-income countries, higher wages lead to increased investments in children’s education and human capital. Interestingly, the decision to work in old age does not depend on economic development but on wage dynamics. Specifically, when the effective wage grows rapidly, grandparents are more likely to work, even while caring for grandchildren. These findings highlight the importance of intergenerational time transfers in shaping economic outcomes. Future research could explore the long-term effects of aging populations on labor markets and family dynamics.