Grandparents and Parental Labor Supply during the COVID-19 Pandemic

Background: Recent demographic studies suggest that grandparents are increasingly involved in their grandchildren’s lives. Evidence suggests that grandparents’ availability is associated with an increase in female labor supply. The coronavirus pandemic in 2020 led nearly half of child care centers in the United States to completely shut down their facilities. With limited child care options and heightened health risks, parents of young children, especially working parents, were left to improvise strategies to meet their child care responsibilities while fulfilling their paid work responsibilities. Yet, we do not know much about how parents with young children under age 5 are coping with such an extreme child care shock. To fill the research gap, this paper examines whether and to what extent the availability of grandparents at home could play a buffering role in the labor supply of working parents of children under age 5 during the COVID-19 pandemic.

Method: Using data from the Current Population Survey (CPS) from January to May in 2019 and 2020, I employ a difference-in-difference approach with propensity matched samples. I take advantage of two sources of variation: an exogenous shock from the COVID-19 pandemic and the availability of grandparents at home. Propensity score matching is employed to address selection bias in grandparent coresidence. I control for individuals’ industry because the pandemic has differential effects depending on the industry. In addition, I account for whether working parents are able to work from home. My outcome measures include 1) labor force status last week, 2) employment status last week, and 3) weekly work hours last week.

Result: I find that parents living in a grandparent coresidence family are more likely to have worked in the last week during the pandemic compared to those living in a two-generational family, conditional on being employed in the last week. Among those who worked in the last week, parents living in a grandparent coresidence family had longer work hours by 1.6 hours per week.

Conclusions and Implications: Results highlight that the availability of grandparents at home played a buffering role in the labor supply of working parents of children under age 5 during the pandemic. In light of persistent fear of the virus, especially for families with young children, the current study sheds light on the importance of grandparental care specifically, and home-based care in general as an alternative care option for families with young children during the health and child care crisis.