Grandparents' childcare and female labor force participation

In the United States, approximately 20% of employed mothers with children under 5 use grandparents as their primary source of childcare. Using the National Longitudinal Survey of Youth 1979 (NLSY79), we investigate whether the availability of this source of childcare has a causal effect on mother’s labor force participation. We compare Ordinary Least Squares 0(OLS), women’s Fixed Effects (FE) and Instrumental Variables (IV) estimates. We find that OLS estimates overestimate the effect of grandparental childcare on young mothers’ labor force participation and are not significantly different from IV estimates. In our preferred specification, FE, we find that the availability of grandparental childcare significantly increases mothers’ labor force participation by 9 percentage points and that this effect is largely driven by minority, single or never married mothers. Our findings suggest that policies that raise retirement ages might increase older cohorts’ labor participation rates at the expense of young women’s through childcare availability.