That doesn't even touch on the breakdown of community organizations (churches, fraternal orders, what have you).
Unpaid favors to family aren't measured in GDP and can't be taxed. Breaking down extended family into individual workers is good for the economy. Having stay-at-home moms work while sending their kids to group childcare is also more economically efficient.
What's good for the economy may not be good for individual humans though. We aren't homo economicus: https://en.wikipedia.org/wiki/Homo_economicus
You see this trend in other areas as well: the gift economy of the early Internet became the advertising economy of today, the open-source economy of the early 90s now has Github etc. offering rewards for creators, the karma economy of early social media contributors is replaced by the Patreon model today, the idea of driving a drunk friend home is replaced by calling them an Uber, the practice of quietly giving a family in need money is replaced by GoFundMe, and so on.
There are pluses and minuses to this: it's certainly been good for the economy, and generates liquidity where previously there was none, but it's done a lot to destroy social relationships and trust.
Sure, grandpa might be a great primary caregiver while mom and dad are at work, but he might also not be. Chances are low he has any training in early childhood education, though he may have raised his own kids -- but he's tautologically not as young as he used to be. But he might have training in law, or medicine, and might plausibly be very valuable as a consultant for the hours that he's instead watching little Ephra.
The licensed daycare in the neighborhood, by contrast, is set up to care for children, and -- depending on grandpa's hourly rate -- might do so at a lower cost. The folks there are (maybe?) trained in early childhood education, and have years of experience handling 1-2 year olds, or 2-3 year olds, or 3-4 year olds, at least compared with grandpa who might only have a year or two of experience with each.
Where has the nuclear family ever been divorced from kinship groups. A nuclear family is by definition part of an extended network, because mom and dad are both parents of one nuclear family as well as children of two others. Without a strong nuclear family there is no kinship, and all nuclear families imply extended kin groups, by definition. I will never understand where this nonsense dichotomy of nuclear family v 'kin' has come from.