n ational t ransfer a ccounts low fertility and intergenerational transfers andrew mason university...
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NNational ational TTransfer ransfer AAccountsccounts
Low Fertility and Low Fertility and Intergenerational Transfers Intergenerational Transfers
Andrew MasonAndrew Mason
University of Hawaii – ManoaUniversity of Hawaii – Manoa
East-West CenterEast-West Center
Symposium on “Equality without Symposium on “Equality without Children?” Institute for Future Studies, Children?” Institute for Future Studies, Stockholm, 7-8 April, 2008Stockholm, 7-8 April, 2008
National Transfer Accounts
MotivationMotivation
►Three features of the economy determine Three features of the economy determine the magnitude, the direction, and the magnitude, the direction, and economic implications of intergenerational economic implications of intergenerational transferstransfers
►Economic lifecycleEconomic lifecycle►Population age structure Population age structure ►Systems for shifting resources across ageSystems for shifting resources across age
SavingSaving Public transfer programsPublic transfer programs Familial Support systemsFamilial Support systems
National Transfer Accounts
OutlineOutline
I.I. Basic ConceptsBasic Concepts
II.II. National Transfer Account ProjectNational Transfer Account Project
III.III. Three Important IssuesThree Important Issues► Low fertility and flows to childrenLow fertility and flows to children► Aging and flows to the elderlyAging and flows to the elderly► Support systems for the elderlySupport systems for the elderly
National Transfer Accounts
The Economic Lifecycle The Economic Lifecycle
0
0.2
0.4
0.6
0.8
1
1.2
0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90
Rel
ativ
e to
lab
or
inco
me(
30-4
9)
Consumption
Labor Income
Note: Based on estimates for Costa Rica, Indonesia, Taiwan, and Thailand.
National Transfer Accounts
Lifecycle combined with Lifecycle combined with population determines the population determines the magnitude and direction of IG magnitude and direction of IG flowsflows
0
200
400
600
800
1000
1200
1400
1600
0
1000
2000
3000
4000
5000
6000
0-4
10-
14
20-2
4
30-3
4
40-4
4
50-5
4
60-6
4
70-7
4
80-8
4
90-9
410
0+
Young Population Old Population
Yl
C
Yl
C
Note: Uses per capita consumption profiles shown above.
National Transfer Accounts
Aggregate LC creates the Aggregate LC creates the demand for inter-age flows or demand for inter-age flows or reallocations.reallocations.
Japan Consumption and Labor Income, 2004
0
2,000
4,000
6,000
8,000
10,000
12,000
0 10 20 30 40 50 60 70 80 90
Yen (billions)
Source: Ogawa et al. 2007.
Labor Income
Consumption
Japan Lifecycle Deficit, 2004
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
0 10 20 30 40 50 60 70 80 90
Yen (billions)
National Transfer Accounts
Inter-age Transfers
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
0 10 20 30 40 50 60 70 80 90
Yen (billions)
GovernmentsFamilies
Charitable Organizations
National Transfer Accounts
Inter-age Asset-based Flows
-5000
-4000
-3000
-2000
-1000
0
1000
2000
3000
4000
5000
0 10 20 30 40 50 60 70 80 90
Yen (billions)
Accumulation anddis-accumulation
of assets
Accumulation anddis-accumulation
of debt
National Transfer Accounts
II. National Transfer AccountsII. National Transfer Accounts
► Objective: Objective: Develop and apply a comprehensive system of accounts Develop and apply a comprehensive system of accounts
that measures economic flows across age groups in a that measures economic flows across age groups in a manner consistent with the System of National Accounts. manner consistent with the System of National Accounts.
► Conceptual foundation: Conceptual foundation: Lee (1994) but also Samuelson (1958), Diamond (1965), Lee (1994) but also Samuelson (1958), Diamond (1965),
and Willis (1988).and Willis (1988).► Organization: Organization:
Collaboration between EWC/UH and UC-Berkeley. Core Collaboration between EWC/UH and UC-Berkeley. Core funding from NIA; NUPRI MEXT Academic Frontier Project, funding from NIA; NUPRI MEXT Academic Frontier Project, Government ofGovernment of Japan. Sub-projects supported by UNFPA, Japan. Sub-projects supported by UNFPA, IDRC, MacArthur Foundation and others.IDRC, MacArthur Foundation and others.
► Website: www.ntaccounts.orgWebsite: www.ntaccounts.org
National Transfer Accounts
Participating CountriesParticipating Countries
Asia/OceaniaAsia/OceaniaChinaChina
IndiaIndia
IndonesiaIndonesia
JapanJapan
Korea, S.Korea, S.
PhilippinesPhilippines
TaiwanTaiwan
ThailandThailand
AustraliaAustralia
EuropeEuropeAustriaAustria
FinlandFinland
FranceFrance
GermanyGermany
HungaryHungary
SloveniaSlovenia
SpainSpain
SwedenSweden
N AmericaN AmericaUnited StatesUnited States
Latin AmericaLatin AmericaBrazilBrazil
ChileChile
Costa RicaCosta Rica
MexicoMexico
UruguayUruguay
AfricaAfricaKenyaKenya
NigeriaNigeria
National Transfer Accounts
The Flow Account IdentityThe Flow Account Identity
► InflowsInflows Labor IncomeLabor Income Asset IncomeAsset Income Transfer InflowsTransfer Inflows
► OutflowsOutflows ConsumptionConsumption SavingSaving Transfer OutflowsTransfer Outflows
Inflows Outflows
( ) ( ) ( ) ( ) ( ) ( )l aY a Y a a C a S a a
Lifecycle Deficit Asset-based Reallocations Net Transfers
Age Reallocations
( ) ( ) ( ) ( ) ( ) ( )l aC a Y a Y a S a a a
National Transfer Accounts
Flow Account DetailsFlow Account Details
► Consumption: public and private for health, Consumption: public and private for health, education, housing, and other.education, housing, and other.
► Public transfers: in-kind (health, education, Public transfers: in-kind (health, education, other) and cash (pensions and other).other) and cash (pensions and other).
► Private transfers: intra-household for Private transfers: intra-household for health, education, housing, and all other; health, education, housing, and all other; inter-household for other. inter-household for other.
► Asset-based reallocations: Public and Asset-based reallocations: Public and private investment; public and private private investment; public and private credit/debt.credit/debt.
► Flows to ROW: remittances, foreign Flows to ROW: remittances, foreign investment, foreign aid.investment, foreign aid.
National Transfer Accounts
Approach to EstimationApproach to Estimation
►National Income Accounts and other National Income Accounts and other aggregate statistics are used as aggregate statistics are used as aggregate controlsaggregate controls
►Age profiles are estimated using Age profiles are estimated using nationally representative surveys, e.g., nationally representative surveys, e.g., income and expenditure surveys, labor income and expenditure surveys, labor force surveys, health expenditure force surveys, health expenditure surveys, etc. surveys, etc.
►Common methodology documented on Common methodology documented on www.ntaccounts.orgwww.ntaccounts.org
National Transfer Accounts
Issue 1: Transfers to ChildrenIssue 1: Transfers to Children
►Does the lifecycle deficit and transfers Does the lifecycle deficit and transfers per child increase as the number of per child increase as the number of children declines? children declines? Becker quality-quantity tradeoffBecker quality-quantity tradeoff If so, the decline in fertility may have a If so, the decline in fertility may have a
smaller effect on aggregate consumption smaller effect on aggregate consumption and saving. and saving.
If so, the decline in numbers may be offset If so, the decline in numbers may be offset by an increase in human capital and, by an increase in human capital and, hence, productivity. hence, productivity.
National Transfer Accounts
Per Capita Lifecycle Deficit, Per Capita Lifecycle Deficit, Japan 2004, Survival WeightedJapan 2004, Survival Weighted
0
0.2
0.4
0.6
0.8
1
1.2
1.4
0 10 20 30 40 50 60 70 80 90
Age
Rel
ativ
e to
Yl(
30-4
9)
Note. US 1985-89 life table used for all countries.
National Transfer Accounts
Tradeoff: Transfers to Children and Tradeoff: Transfers to Children and Number of Children, 13 CountriesNumber of Children, 13 Countries
y = -7.7914x + 15.473
R2 = 0.6125
6789
10111213141516
0.2 0.4 0.6 0.8 1 1.2
Child Dependency Ratio: N(0-19)/N(20-59)
LC
D C
hil
dre
n/Y
l(30
-49)
National Transfer Accounts
Tradeoff: Transfers to Children and Tradeoff: Transfers to Children and Number of Children, 13 CountriesNumber of Children, 13 Countries
6789
10111213141516
0.2 0.4 0.6 0.8 1 1.2
Child Dependency Ratio: N(0-19)/N(20-59)
LC
D C
hil
dre
n/Y
l(30
-49)
Jp
US ChTwSK Th
SwFr
IndoUrCR In
Ph
National Transfer Accounts
Issue 2: Lifecycle Deficit, Issue 2: Lifecycle Deficit, ElderlyElderly►Does the lifecycle deficit per elderly Does the lifecycle deficit per elderly
increase with the share of the elderly? increase with the share of the elderly? Preston and others argue yes – political Preston and others argue yes – political
power. power. If so, the rise in the old-age population If so, the rise in the old-age population
may lead to a greater fiscal burden. may lead to a greater fiscal burden.
National Transfer Accounts
Tradeoff: LC Deficit of the Elderly Tradeoff: LC Deficit of the Elderly and Number of Elderly, 13 Countriesand Number of Elderly, 13 Countries
y = 11.993x + 4.5285
R2 = 0.4266
23456789
101112
0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5
Old-age Dependency Ratio: N(60+)/N(20-59)
LC
D E
lder
ly/Y
l(30
-49)
National Transfer Accounts
Tradeoff: LC Deficit of the Elderly Tradeoff: LC Deficit of the Elderly and Number of Elderly, 13 Countriesand Number of Elderly, 13 Countries
23456789
101112
0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.5
Old-age Dependency Ratio: N(60+)/N(20-59)
LC
D E
lder
ly/Y
l(30
-49)
UrJpUS
Fr
Sw
CRTw
ThCh
SK
Ph InIndo
National Transfer Accounts
Issue 3. Support Systems for Issue 3. Support Systems for the Elderly. the Elderly. ►How do they differ across countries?How do they differ across countries?►Do Asian countries rely more on familial Do Asian countries rely more on familial
transfers and Western and Latin transfers and Western and Latin American countries more on public American countries more on public transfers? transfers?
►Does the expansion of public systems Does the expansion of public systems crowd saving as hypothesized by crowd saving as hypothesized by Feldstein?Feldstein?
►Or familial transfers? Or familial transfers?
National Transfer Accounts
Old-age Reallocation System, Selected Countries.
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
US
Thailand
Costa Rica
JapanTaiw an
Korea
Familial transfers equally important in Thailand, Korea, and Taiwan (36-
40%). Net familial transfers near zero in US, CR, and J. Large
public transfers in CR and J. More
reliance on assets in CR & US.
Net public transfers to elderly are zero in
Thailand; about 25% in Taiwan and Korea.
National Transfer Accounts
Old-age Reallocation System, Selected Countries.
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
US
Thailand
Costa Rica
JapanTaiw an
Korea
Reliance on assets in old-age
National Transfer Accounts
Old-age Reallocation System, 65 to 85-year-olds, Taiwan, 2003.
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
65-year-olds67% assets, 2%
public, 32% private
85-year-olds23% assets, 39%
public, 38% private
National Transfer Accounts
Old-age Reallocation System, Costa Rica 2004
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
85
National Transfer Accounts
Old-age Reallocation System, Uruguay 1994
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
85
National Transfer Accounts
Old-age Reallocation System, 65-85-year-olds, Taiwan, 2003.
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
From ages 65 to 80, familial share varies little. Public rising and asset-based declining.
After 80 familial share is rising
and asset-based
declining.
Old-age Reallocation SystemFinland, 2003, 65-85 and Philippines, 1999, 65-80.
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
Finland 65
Finland 85
Philippines 80
Philippines 72
National Transfer Accounts
Old-age Reallocation System, 75-year-olds, Taiwan, 1977-2003.
0
50
75
100
75
75
50
50
25
25
0
0
25
100
100
Asset-based (%)
Public transfers (%)
Family Transfers (%)
1995-2003
1977-1994
Asset-based reallocations and public transfers have increased
over time; familial transfers have declined
precipitously.
NHI began in 1995; net public
transfers increased.
National Transfer Accounts
Summary of Support Summary of Support Systems Systems ► Estimates are preliminaryEstimates are preliminary► Old-age support systemsOld-age support systems
Show wide variationShow wide variation Vary with the age of the elderlyVary with the age of the elderly Are changing rapidlyAre changing rapidly
► Familial support system for the elderlyFamilial support system for the elderly Small in high-income countries (West and Japan)Small in high-income countries (West and Japan) Upward in rest of Asia, but declining over timeUpward in rest of Asia, but declining over time Downward in Latin AmericaDownward in Latin America
National Transfer Accounts
Warnings!Warnings!
►NIPA and NTA are incompleteNIPA and NTA are incomplete TimeTime EnvironmentEnvironment
►Aggregate data vary in quality and Aggregate data vary in quality and coveragecoverage
► Imputing values to individuals based Imputing values to individuals based on values for households is difficulton values for households is difficult
National Transfer Accounts
Final RemarksFinal Remarks
►Economic resources shifted across age Economic resources shifted across age are enormous.are enormous.
► Important in many respectsImportant in many respects Accumulation of human and physical Accumulation of human and physical
capitalcapital Generational equityGenerational equity Economic growthEconomic growth Externalities to childbearingExternalities to childbearing
►Measuring and studying these flows is Measuring and studying these flows is difficult but essential. difficult but essential.
NNational ational TTransfer ransfer AAccountsccounts
Support for this project has been provided Support for this project has been provided by:by:
• National Institute on Aging: R37-AG025488 and R01-National Institute on Aging: R37-AG025488 and R01-AG025247AG025247
• NUPRI MEXT Academic Frontier Project, Government of NUPRI MEXT Academic Frontier Project, Government of JapanJapan
• John D. and Catherine T. MacArthur Foundation John D. and Catherine T. MacArthur Foundation
• International Development Research Center (IDRC)International Development Research Center (IDRC)
• United Nations Population Fund (UNFPA)United Nations Population Fund (UNFPA)
National Transfer Accounts
The National Transfer Accounts project is a collaborative effort of East-West Center, Honolulu
and Center for the Economics and
Demography of Aging, University of California - Berkeley
Lee, Ronald, Co-DirectorLee, Ronald, Co-Director
Mason, Andrew , Co-Director Mason, Andrew , Co-Director
Auerbach, Alan Auerbach, Alan
Miller, Tim Miller, Tim
Lee, Sang-Hyop Lee, Sang-Hyop
Donehower, Gretchen Donehower, Gretchen
Ebenstein, Avi Ebenstein, Avi
Wongkaren, TurroWongkaren, Turro
Takayesu, Ann Takayesu, Ann
Boe, Carl Boe, Carl
Comelatto, Pablo Comelatto, Pablo
Sumida, Comfort Sumida, Comfort
Schiff, Eric Schiff, Eric
Stojanovic, Diana Stojanovic, Diana
Langer, EllenLanger, Ellen
Chawla, AmonthepChawla, Amonthep
Pajaron, Marjorie CincoPajaron, Marjorie Cinco
National Transfer Accounts
Japan Key Institutions: Nihon University Population Research
Institute and the Statistics Bureau of Japan, Tokyo, Japan. Ogawa, Naohiro, Country Leader
Matsukura, Rikiya Maliki
Obayashi, Senichi Kondo, Makoto Fukui, Takehiro
Ihara, HajimeSuzuki, Kosuke
Akasaka, Katsuya Moriki, Yoshie
Makabe, Naomi Ogawa, Maki
National Transfer Accounts
AustraliaKey Institution: Australia National University
Jeromey Temple, Country LeaderBrazil
Turra, Cassio, Country Leader Lanza Queiroz, BernardoRenteria, Elisenda Perez
Chile Key Institution: United Nations Economic Commission for
Latin America and the Carribean, Santiago, Chile Bravo, JorgeMauricio Holz
National Transfer Accounts
Taiwan Key Institution: The Institute of
Economics, Academia Sinica, Taipei, Taiwan.
Tung, An-Chi, Country LeaderLai, Mun Sim (Nicole)
Liu, Paul K.C.Andrew Mason
China Key Institution: China Center for
Economic Research, Beijing, China.
Ling, Li, Country Leader Chen, Quilin
Jiang, Yu
National Transfer Accounts
France Wolff, Francois-Charles, Country Leader
Bommier, Antoine Thailand
Key Institution: Economics Department, Thammasat University. Phananiramai, Mathana, Country Leader
Chawla, Amonthep (Beet) Inthornon, Suntichai
India Key Institution: Institute for Social and Economic Change, Bangalore
Narayana, M.R., Country Leader Ladusingh, L.
MexicoKey Institution: Consejo Nacional de Población
Partida, Virgilio, Country Leader Mejía-Guevara, Iván
National Transfer Accounts
Indonesia Key Institution: Lembaga Demografi, University of Indonesia, Jakarta, Indonesia.
Maliki, Country Leader Wiyono, Nur Hadi Nazara, Suahasil
Chotib Philippines
Key Institution: Philippine Institute for Development Studies. Racelis, Rachel H., Country Leader
Salas, John Michael Ian S.Pajaron, Marjorie Cinco
Sweden Key Institution: Institute for Future Studies, Stockholm, Sweden.
Lindh, Thomas, Country Leader Johansson, Mats Forsell, Charlotte
National Transfer Accounts
Uruguay Bucheli, Marisa, Country Leader
Furtado, Magdalena Rodrigo Ceni
Cecilia Rodriguez South Korea
An, Chong-Bum , Country LeaderChun, Young-JunLim, Byung-In
Kim, Cheol-Hee Jeon, Seung-Hoon
Gim, Eul-Sik Seok, Sang-Hun
Kim, Jae-Ho
National Transfer Accounts
Austria Key Institution: Vienna Institute of Demography Fuernkranz-Prskawetz, Alexia, Country Leader
Sambt, Joze Costa Rica
Key Institution: CCP, Universidad de Costa Rica Rosero-Bixby, Luis, Country Leader
Maria Paola Zuniga Slovenia
Sambt, Joze, Country Leader Hungary
Key Institution: TARKI Social Research InstituteGal, Robert
Medgyesi, Marton Finland
Key institutions: The Finnish Center for Pensions And the Finnish Pension Alliance
Vanne, ReijoGröhn, Jukka
Vaittinen, Risto
National Transfer Accounts
United States Key Institution: Center for the Economics and Demography of Aging
Lee, Ronald, Country LeaderMiller, Tim
Ebenstein, Avi Boe, Carl
Comelatto, Pablo Donehower, Gretchen
Schiff, EricLanger, Ellen
National Transfer Accounts
Kenya Mwabu, Germano
NigeriaSoyibo, Adedoyin
NNational ational TTransfer ransfer AAccountsccounts
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