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 increased longevity may reduce the prevalence of harsh parenting, while enhanced altruism towards the elderly benefits them but can undermine children’s human capital development. We then examine the first-best optimality and the second-best public policies in the steady state. 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.