Grandparenting and Labor Supply

We then consider a model that extends Cardia and Ng (2006) analysis of grandparenting and rationalizes this evidence with standard preferences and working-age grandparents. The key idea is that individuals value a particular good, "time spent with family children". This good can be "produced" when young but is unavailable when old, unless one becomes a grandparent. In a statndard model hours would roughly follow wages over the life cycle. We show that what changes over the life cycle is the opportunity to consume young children in one's family. The appearance of grandchildren increases the opportunity cost of market work, thus inducing individuals to work less.