Three generations under one roof'' is an old Chinese saying used to describe a desired living arrangement. The traditional concept of happiness for a Chinese elderly person is being able to ''play with grandchildren with candy in mouth, enjoy life with no cares.'' In a fast-changing economy like China, how does society, especially the elderly themselves, view these traditional values? Using the 2005 Chinese General Social Survey, we study the determinants of happiness of the Chinese elderly. We are particularly interested in whether living with their child and whether living with their grandchild affect the happiness of the elderly. An important empirical concern is that unobserved permanent income may affect both the living arrangements of the elderly and their level of happiness. We include property ownership variables as proxies and also adopt an instrument variable approach to identify the causal relationship between the elderly's happiness and their living arrangements. We find that, conditional on living with a grandchild, living with one's child has a negative effect on the elderly's happiness. Furthermore, elderly Chinese who live with grandchildren are associated with a much higher degree of happiness than their counterparts.

Using the China Health and Retirement Longitudinal Study (CHARLS) 2011-12 baseline data, this contribution explores to what extent taking care of grandchildren and frail parents influences rural middle-aged Chinese adults' off-farm employment. The findings show that, conditional on socioeconomic and demographic characteristics, taking care of grandchildren has a negative effect on rural middle-aged men's and women's off-farm job participation and hours worked. Caregiving for parents does not have the same negative effects on off-farm employment and hours worked. Furthermore, the study finds that annual earnings are also negatively affected by caregiving responsibilities, especially for women and men taking care of grandchildren.