Childcare Subsidies and Grandparent Outcomes

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by Yulya Truskinovsky, Duke University

This project addresses the impact of providing full-time childcare to grandchildren on the economic outcomes of grandmothers. Grandparents provide a significant amount of childcare in the U.S., but little is known about how this informal, and often uncompensated, time transfer impacts their economic and health outcomes. Federally-funded childcare assistance, provided by states to families with young children at up to 85 percent of state median income, can be used to compensate grandparent-provided childcare and/or to substitute market care for grandparent care. There is significant heterogeneity by state, however, in the size of the government payment, the circumstances under which it can be received, and the length of waiting lists for coverage. I use the variation in the availability and generosity of childcare subsidies to model the effect of the policy on the likelihood that older women provide full-time grandchild care. Then I use this plausibly exogenously determined behavioral response to identify the causal impact of providing grandchild care on outcomes of older adults, including: choice of living arrangement, labor force participation, retirement savings, and health. This project will assess the impact of providing grandchild care on the economic and health outcomes of older Americans around retirement age, and more broadly contribute to the literature on behavioral determinants of retirement security and the family-level spillovers of targeted government transfer programs.

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