Social security and female labor supply in China

Abstract

I develop a dynamic model of female labor supply, featuring human capital accumulation and intergenerational time transfer in the form of grandparental child care, to study how raising urban Chinese women’s social security eligibility age would affect their employment, human capital, and earnings. I find the policy reform encourages labor supply of older women but discourages labor supply of low-skilled young women with children as a result of children’s grandmothers working more and providing less child care. Furthermore, the effectiveness of policy in stimulating the labor supply and earnings of women depends on the degree of labor market frictions facing old age women after the policy change.