Grandparent-provided childcare and labor force participation of mothers with preschool children in Urban China

This paper investigates the effects of grandparent-provided childcare and the access to daycare services on the labor force participation of mothers with children under 7 years old in urban China. Using two-stage residual inclusion method, the analysis finds that grandparent-provided childcare and the access to daycare services both have strong positive effects on maternal labor force participation (MLFP). Specifically, having grandparent-provided childcare increases MLFP by 38–43%, whereas having access to daycare services increases MLFP by 24–29%. The analysis also finds that having a healthy grandmother is a significant determinant in whether grandparent-provided childcare is utilized and that the demand for grandparent-provided childcare is higher in localities in which daycare services for children under 3 years old are more expensive. These results indicate that grandparents, particularly grandmothers, play an important role in sustaining MLFP, particularly as the supply of publicly funded daycare programs is declining.