Does child care weaken household financial resilience? Evidence from China under the life cycle perspective

Abstract

Objective: This study explored the correlation between child care and household financial resilience, considering differences across the family life cycle. Background: Existing research has examined the effects of child care on household consumption and financial decision-making. Yet, little is known about how child care influences household financial resilience across various stages of the family life cycle. Method: A fixed effect model was employed to analyze data from the 2013–2019 China Household Finance Survey (n = 4,081), a comprehensive data set covering households’ demographic characteristics and financial conditions. Additionally, a finite mixture model for endogenous clustering was used. Results: Overall and across most stages of the family life cycle, child care was found to weaken household financial resilience. However, no association was detected when all children reached a certain age. Education, financial literacy, and social capital can alleviate the negative impact of child care for particular households in the growth stage. Conclusion: Findings indicate that child care weakens household financial resilience, though this effect is not persistent across the entire family life cycle and can be mitigated. Implications: Public policy that encourages intergenerational support and strengthens household endogenous dynamics can be beneficial in alleviating childcare burdens.