Recent studies, especially those from developed countries, find little causal effect of grandparenthood on older individuals’ mental health. However, the results may differ in developing contexts, where grandparents often face unique challenges, such as insufficient formal childcare, inadequate pension support, a higher likelihood of remaining in the workforce, and significant healthcare copayment burdens. Using four waves of the China Health and Retirement Longitudinal Survey and a fixed-effects difference-in-differences approach, we find that becoming a grandparent adversely affects the mental health and self-rated health of older adults in China. The transition to grandparent also increases outpatient care utilization and out-of-pocket costs for outpatient services. Grandmothers and those with vulnerable socio-economic backgrounds are more susceptible to these negative health impacts and increased healthcare costs. Grandchild care emerges as a major channel through which these effects manifest, with grandparenthood leading to an average monthly increase of 83 h in grandchild care. Additionally, reduced working hours combined with an increased likelihood of retirement, poorer health behaviors, and strained relationships with children all contribute to explaining the main findings. Our findings highlight the overlooked health costs of grandparenting in developing countries. Expanding access to formal childcare may mitigate the negative health impacts on older caregivers and improve overall well-being among aging populations.
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