Do fertility policies affect grandparents’ labour supply? Evidence from China

This study examines how China’s universal two-child policy affected labour supply among older adults. Using four waves of nationally representative data from the China Health and Retirement Longitudinal Study (CHARLS) spanning 2011–2018, we implement a difference-in-differences design that exploits variation in household exposure to the policy, measured by the pre-policy share of adult children aged 20–45 with at most one child. Exposure to the policy significantly reduced grandparents’ labour force participation and weekly working hours. The decline in higher-intensity work is not robust. Effects vary across gender and residence. Results are robust to alternative specifications and placebo tests. Our findings highlight that demographic policy reforms can influence labour supply beyond the parental generation and underscore the importance of complementary childcare and elderly employment policies in ageing societies.