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Grandparental childcare, family allowances and retirement policies

Author

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  • Giam Pietro Cipriani

    (University of Verona and IZA)

  • Tamara Fioroni

    (University of Verona)

Abstract

The paper uses an OLG model to study the interaction between policies designed to ensure the sustainability of the pension system, i.e. child allowances and pensions policies, and grandparental childcare. We find that the rise in grandparenting negatively affects the elderly labour supply hampering the impact of pension policies designed to raise the retirement age and lengthen working lives. Then, we introduce child allowances and find that the impact of child allowances on the fertility rate is influenced by the efficiency of grandparenting in reducing child-rearing costs. Child benefits have a positive impact on fertility only if grandparenting is not very effective at reducing childcare costs. This suggests that the role of grandparents in various countries may partly explain the inconsistency in empirical evidence on the relationship between child benefits and fertility rates. The study also finds that child benefits have a positive impact on the elderly labour supply when grandparenting is efficient.

Suggested Citation

  • Giam Pietro Cipriani & Tamara Fioroni, 2024. "Grandparental childcare, family allowances and retirement policies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(6), pages 1669-1692, December.
    • Handle: RePEc:kap:itaxpf:v:31:y:2024:i:6:d:10.1007_s10797-023-09822-9
    DOI: 10.1007/s10797-023-09822-9
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    More about this item

    Keywords

    PAYG pensions; Endogenous retirement; Endogenous fertility; Child policies;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H8 - Public Economics - - Miscellaneous Issues
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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