This paper investigates an underexplored trade-off in policy design: how measures encouraging work among the older population can unintentionally impact their offspring’s fertility rates. Specifically, it investigates how changes to pension eligibility may have reduced grandmothers’ availability for childcare, subsequently influencing their children's fertility decisions. 

Given Australia’s low fertility rates and aging population, this note highlights the trade-offs in designing policies that encourage labour force participation among older people without negatively affecting fertility.

Key findings

• The increase in the pension eligibility age delayed grandmothers’ retirement, increasing their employment rate from 25% to 36%, and hours of work by 3.9 hours per week.
• Having a grandmother who qualifies for the pension based on her age increases the likelihood that her daughter will have a child, from 69% to 73.5%, and increases the average number of children per woman from 1.47 to 1.56.
• This effect on the average number of children per woman is comparable to the impact observed with the introduction of paid parental leave policies.
• Among daughters in lower-wealth households and those with lower educational attainment, grandmother’s pension eligibility had a larger effect on fertility, suggesting that access to grandparental childcare may play a greater role in fertility decisions for these groups.
• Grandmothers who are age-qualified for the pension are more likely to provide childcare, whereas those who work longer hours are less available for caregiving.