Grandparental retirement and intergenerational transfers: Evidence from The Irish Longitudinal Study on Ageing (TILDA)

A good understanding of intergenerational relationships and transfers has important implications for employment, human capital and social mobility. This paper investigates the impact of grandparental retirement on children’s outcomes in the short term using state pension eligibility to instrument grandparental retirement that can be endogenously affected by children’s outcomes. Results show little impact on children’s overall employment rate, but a statistically significant and negative impact on the full-time employment rate of children: a reduction by around 11.7 percentage points. In the meantime, downstream financial and time transfers, neither the likelihood of provision nor intensity, are largely affected. However, these impacts are not driven by contemporaneous decisions on marriage or fertility but likely by increased needs for family caring from mothers themselves in a subsequent period. Furthermore, the impact is heterogeneous by gender and socioeconomic heterogeneities. The negative employment effect is more pronounced in socioeconomically advantaged groups, suggesting heterogeneous and complex trade-offs between employment and family life by socioeconomic resources. JEL code: J14, J21, J26