Upbringing and Support: Parental Health and Children’s Labor Supply

Zhang Yongfeng; Lu Yao

doi:doi:10.16538/j.cnki.jfe.20220216.302

Summary

It is common for adult children to take care of elderly parents in the family. This phenomenon is particularly obvious in China, which has been influenced by Confucian culture for a long time. According to the date of CGSS in 2017, 95.66% of children agree that adult children have the obligation to take care of elderly parents. The degree of aging in China is increasing with the rapid development of economy. According to the data of the “sixth Census” in 2010, the degree of aging in China is 13.26%; by 2020, the degree has risen to 18.70%. From the perspective of life cycle, the healthy human capital stock of the elderly is lower and is more threatened by the impact of health risks. The support obligation expressly stipulated in the legal text and the conventional concept of filial piety in the informal system promote parental health change to be further transmitted to the labor supply decision-making of children, forming a crowding-out effect on the labor supply of children. According to the data of the International Labor Organization, China’s labor participation rate fell from 77.22% in 2000 to 67.99% in 2019, with an overall decline of 11.95%. There is not only the transformation of labor market structure caused by the deepening of aging, but also the impact of the health change of elderly parents on the labor supply of adult children. Effective and stable labor supply has always been the key to accelerating the construction of a new development pattern of dual circulation and mutual promotion at home and abroad. Therefore, clarifying the real relationship between parental health and children’s labor supply is very important to promote high-quality economic development under the dual background of deepening aging and shrinking demographic dividend. Using the data of CHARLS in 2015, we find that parental implicit health change fails to cause their children to withdraw from the labor market. Parental explicit health change has a significant negative impact on children’s labor supply decision-making. Overall, the crowding-out effect of parental health change on rural children, female children, children living separately and children with higher intergenerational support is more significant. At the same time, parental implicit health change significantly increases the possibility of employing nurses. In parental health care, nurses partially replace children as a relatively rational choice under the constraints of pursuing the maximization of family utility. Further research finds that medical insurance, the increase in the number of children and the improvement of medical conditions help to smooth the impact of parental health change on children’s labor supply, and dilute the crowding-out effect of parental health change on children’s labor supply, especially when the number of children in the family exceeds 2. This paper verifies that the intergenerational reciprocity model of “Upbringing – Support” still exists in China, but we need to be vigilant against the impact of the transformation of parental implicit health change and explicit health change on China’s labor market under the background of aging.