Jin Cao (Norges Bank) - Who Cares: Deciphering China’s Female Employment Paradox

Co-authors: Haiyue Yu (Dongbei University of Finance and Economics) and Shulong Kang (Dongbei University of Finance and Economics) 


China is featured by extraordinarily high female post-childbirth labor market participation rate and labor intensity, given that the public subsidy to childcare is poor and policy support for childbearing female employees is largely absent. Establishing a panel dataset that tracks women’s childbirths and employment, we find that such paradox is well explained by the intra-family grandparental childcare. Correcting the selection bias that stems from women’s fertility choices using the PSM-DID model, we find that women without grandparental support suffer a substantial drop in post-childbirth employment, while the employment of women with grandparental support even rises after childbirth. It takes women without grandparental support twice as long to recover their employment after childbirths. Finally, we find that childbirth does not decrease labor intensity of women due to the lack of flexibility in labor market and women face a stay-or-quit dilemma when grandparental childcare is absent.

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