Fertility and career choices in an overlapping generations model with sandwich caregivers

Abstract

This study examines how the “sandwich burden” of simultaneously caring for children and elderly parents influences middle-aged adults’ fertility and career choices. A novel mechanism is introduced where declining fertility can intensify the caregiving burden, as individuals have fewer siblings to share responsibility. The dual care duties can affect career choices between regular and non-regular employment, with the latter enabling more time for caregiving duties. Using an overlapping generations framework, the model identifies two possible long-run equilibria: one with full regular employment and another with a mix of regular and non-regular workers. A high training time cost or long unpaid work requirement can push the economy toward the latter equilibrium. Calibrating the model to Japanese data since 1970, I replicate the observed decline in fertility and the regular employment rate. These findings highlight the importance of intergenerational externalities in shaping labor market outcomes and demographic trends.