Parenting and Eldercare: Positive and Normative Analyses

Global trends in delayed childbearing and population aging have intertwined parenting and eldercare, necessitating concurrent attention to young children and elderly parents. This paper develops an overlapping-generations model where young adults, exhibiting two-sided altruism, educate their children to promote human capital accumulation and provide caregiving for their aging parents. Education can be attained through financial investments and the implementation of harsh discipline, which demands minimal parental resources but can strain parent-child relations. Eldercare is labor intensive, with its quality decreasing with the frequency of childhood discipline. Our positive analysis suggests that extended longevity may reduce the prevalence of harsh parenting, and enhanced altruism towards the elderly benefits them but can have adverse effects on private savings and children’s human capital. We then examine the steady-state first-best solution and the second-best public policies. When intergenerational altruism is limited, we advocate for the idea of taxing labor and subsidizing education from a novel perspective of adjusting parenting styles and promoting eldercare.