Intergenerational Time Transfers and Internal Migration: Accounting for Low Spatial Mobility in Southern Europe

This paper examines the hypothesis that living close to grandparents is optimal for Southern European young couples with children in which the wife works given the combination of, on the one hand, substantial help flows in the form of grandparenting and, on the other hand, the shortage in the provision of formal childcare services in these countries. I develop a partial equilibrium job search model that incorporates these findings. Simulation results show that a reduction in the price of private childcare services is more effective in increasing women’s employment, fertility and inter-regional migration rates than an increase in the availability of publicly funded childcare slots. Using ECHP data I find that families with children in which the wife works move significantly less than equivalent childless couples only if they live in a Southern European country. That effect is found for both inter- and intra-regional migrations but is substantially larger in the former case.