Dual Caregiving and Overlapping Generations

This paper addresses the issue of dual caregiving duties (childrearing and elderly care) and how they can affect the stability of an economy. In this model, agents are considered siblings to one another, making collective decisions on fertility, savings, and division of labor to maximize their welfare. In the long run, the dual care burden plays a significant role. If it is sufficiently small, the economy is on a sustainable growth path. If it is sufficiently large, the economy can be locked in a nursing hell path where the fertility is so low that almost all resourcesmust be dedicated to caregiving, leaving little for income generation. In this case, the government can provide child allowances to incentivize childbearing andmitigate the problem. More critically, if the caregiving burden surpasses a certain threshold, the economy may face a structural collapse. In this case, even a pronatalist policy is infeasible to implement as raising more children will exceed the economy’s capacity.