Grandparents are regular providers of free child care. Similar to other forms of child care, availability of grandparent-provided child care affects fertility and labor force participation of women positively. However, grandparent-provided child care requires residing close to parents or in-laws. While living close can provide access to free child care, it may also imply costly spatial restrictions. We find that mothers residing close to parents or in-laws have lower wages and that the probability of having to commute increases if relatives provide child care.
We build a model of residence choice, fertility, and female labor force participation that can account for the relationships between grandparent-provided child care, fertility, and female labor market outcomes. We simulate our model to analyze how women's decisions on residence, fertility, and labor force participation would change if the availability of grandparent-provided child care or family policies were altered.
We find that if child care subsidies were raised to the Swedish level, fertility and mothers' labor force participation would increase, while mobility would remain unchanged. The absence of grandparents, on the other hand, would increase mobility, while it would have only limited negative effects on aggregate fertility and labor force participation.
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