This paper studies empirically how children affect the retirement decisions of their parents. In theory, more children can make their parents retire earlier through the channel of old-age support. On the other hand, parents may retire later with more ...
This paper studies empirically how children affect the retirement decisions of their parents. In theory, more children can make their parents retire earlier through the channel of old-age support. On the other hand, parents may retire later with more children because of more expenditure on the latter such as educational expenses. Using the Korean Longitudinal Study of Aging data which is produced by Korea Employment Information Service, we employ the IV probit model to analyze the effect of the number of children on parental retirement. We find that the more children parents have, the later they retire. This finding indicates that the expenditure effect is more dominant than the old-age support effect. With the social norm of old age support gradually fading over generations, older parents are predicted to have a less adverse effect of children on retirement, which is confirmed by our result.