Transcript An Overview of National Transfer Accounts

An Overview of National
Transfer Accounts
Andrew Mason
May 2009
Outline
1. Introductory Remarks
2. National Transfer Flow Account
3. Wealth and Wealth Revaluation Account
briefly described
Objectives
• Develop a system of accounts that
measures the economic lifecycle and the
flow of economic resources across age
groups.
• Comprehensive approach that includes all
reallocations: investment, credit, and
public and familial transfers
• Consistent with and complementary to
National Income and Product Accounts
Objectives
• International in scope to allow analysis of
institutions and policies in countries at
different levels of development and with
different cultures.
• Historical depth to improve understanding
about evolution of labor, consumption,
saving, and public and private support
systems
• Projections to support policy analysis
Importance
• Interage flows are large – about half of
GDP.
• Profound effect on economic growth and
generational equity (demographic
dividends)
• Central to human capital investment
• Systems are strained by changes in age
structure
Organization
• Lead institutions
– East-West Center
– Center for the Economics and Demography of Aging,
University of California – Berkeley
• Funding
–
–
–
–
–
National Institute on Aging
United Nations Population Fund
IDRC
MacArthur Foundation
Others
• Website: www.ntaccounts.org
Participating Countries
ASIA
China
India
Indonesia
Japan
Korea, S.
Philippines
Taiwan
Thailand
AFRICA
Kenya
Mozambique
Nigeria
Senegal
South Africa
EUROPE
Austria
Finland
France
Germany
Hungary
Spain
Slovenia
Sweden
NORTH AMERICA
United States
LATIN AMERICA
Brazil
Chile
Costa Rica
Mexico
Uruguay
OCEANIA
Australia
Conceptual Foundations
• Lee (1994), Samuelson (1958), Diamond
(1965), and Willis (1988).
• Mason, Lee, Tung, Lai, Miller (2009); Lee,
Lee, Mason (2008).
II. National Transfer Accounts
Per Capita Consumption and
Production
Most Important Graph in the World:
The Economic Lifecycle
500
400
Surplus
Labor
Production
300
200
Consumption
100
Deficits
0
0
10
20
30
40
Age
50
60
70
80
Total Reallocations: Lifecycle Deficit
6000
4000
Deficits
2000
0
0
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
-2000
-4000
Life cycle deficit is
equal to the difference
between consumption
and labor income at
each age.
Surplus
-6000
-8000
Age
NT Flow Account, Aggregate. Taiwan, 1998 (NT$ billion), nominal
Age
Total
Lifecycle Deficit
0-19
20-29
30-49
50-64
65+
832
1,704
7
-1,329
25
424
Consumption
6,570
1,775
1,163
2,376
757
499
Private
5,290
1,244
951
2,040
640
414
Public
1,280
531
212
335
117
85
5,738
70
1,156
3,704
732
75
Less: Labor income
Lifecycle deficit is the difference between production and consumption over
the lifecycle. All values are totals for the age group. Per capita values are
also estimated.
Major Reallocation Systems
6000
4000
Public &
Familial Transfers
2000
0
0
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
-2000
-4000
-6000
-8000
Asset-based
Reallocations
Asset-based
reallocations involve
inter-temporal
exchange.
Age
The Flow Account Identity
• Inflows
• Outflows
– Labor Income
– Asset Income
– Transfer Received
– Consumption
– Saving
– Transfers Paid
Y (a )  Y (a )   (a)  C (a )  S (a )   (a )
l
a


Inflows
Outflows
C (a)  Y l (a)  Y a (a)  S (a)    (a)    (a)
Lifecycle Deficit
Asset-based Reallocations
Net Transfers
Age Reallocations
Classification of Flows
• Mediating institution
– Public flows are mediated by the government
– Private flows are mediated by households,
families, NGOs, private individuals, etc.
– Rest of the World
• Economic form
– Transfers
– Asset-based reallocations
Public Sector
• Serves as an intermediary
• Transfer function
– Takes resources from one age group (taxes)
– Gives those resources to another age group
• In-kind transfers, e.g., health, education, national defense,
etc.
• Cash transfers, e.g., public pension programs,
unemployment benefits, welfare programs, etc.
• Asset-related function
– Saves on behalf of the population (age groups)
– Borrows from investors (age groups) on behalf of
taxpayers (age groups)
– Earns asset income and pays interest on debt
Private Sector
• Intermediaries: households, families, NGOs, private
individuals
• Transfer function: individuals give and receive transfers
– Inter-household transfers including to ROW
– Intra-household transfers
– Capital transfers, e.g., bequest (not included in flow account)
• Asset related function
– Accumulate and dis-accumulate assets
• Capital
• Public and private debt
– Asset income
Table 1. A Classification of NTA Reallocations.
Asset –based Reallocations
Capital
Public
Private
Public
infrastructure
Housing
Consumer
durables
Factories
Farms
Inventories
Source: Adapted from Lee 1994.
Credit
Transfers
Public debt
Student loans
Money
Public education
Public health care
Unfunded pension
plans
Consumer credit
Familial support of
children and parents
Bequests
Charitable
contributions
Households vs. Individuals
• Individual is the basic unit of analysis
• Consumption, labor income, public transfers,
and intra-household private transfers are
allocated to individuals;
• Some public transfers are assigned to
household head.
• Inter-household private transfers are between
household heads;
• Assets are held by the household head; saving
is by household heads; asset income accrues to
household head.
Public Transfer Inflows, Taiwan, 1998
45
Other Cash
40
NT$ billion
35
Public Pensions
30
20
National Health
Insurance
Public Health Care
15
Public Education
25
10
Collective Goods and
Services
5
0
0
10 20 30 40 50 60 70 80 90
Public Transfer Inflows and Outflows, Taiwan,
1998
60
40
NT$ billion
20
0
0
-20
-40
-60
-80
10
20
30
40
50
60
70
80
90
Inflows
Outflows
Net Public Transfers and the Lifecycle Deficit, Taiwan 1998
150
100
Net Inflows
Lifecycle deficit
NT$ billion
50
0
-50
-100
-150
0
10
20
30
40
50
60
70
80
90
Net Private Transfer, Taiwan, 1998
100
80
Intra-household
60
NT$ billion
40
Inter-household
20
0
-20 0
-40
-60
-80
-100
10
20
30
40
50
60
70
80
90
Transfers and the Lifecycle Deficit
150
Total transfers
Public transfers
Lifecycle deficit
100
NT$ billion
50
0
-50
-100
-150
0
10
20
30
40
50
60
70
80
90
Asset-based Reallocations, Taiwan, 1998
90
Asset Income
Less: Saving
80
70
NT$ billion
60
50
40
30
Net inflow:
asset income
exceeds saving.
Net
outflow:
saving
exceeds
asset
income.
20
10
0
-10 0
10
20
30
40
50
60
70
80
90
NT Flow Account, Aggregate. Taiwan, 1998 (NT$ billion), nominal
Age
Total
0-19
20-29
30-49
50-64
65+
Reallocations
832
1,704
7
-1,329
25
424
Asset-based reallocations
861
-5
-101
414
271
282
Income on Assets
2,456
4
175
1,539
528
211
Less: Saving
1,595
9
276
1,126
256
-72
-29
1,710
108
-1,742
-246
141
2
611
51
-673
-103
116
-31
1,099
-18
-1,155
-52
95
0
0
75
86
-91
-70
Transfers
Public
Private
Bequests
Lower panel measures the reallocation systems employed to satisfy
the lifecycle deficits and surpluses at each age.
NT Flow Account, Aggregate. Taiwan, 1998 (NT$ billion), nominal
Age
Total
0-19
20-29
30-49
50-64
65+
Reallocations
832
1,704
7
-1,329
25
424
Asset-based Reallocations
861
-5
-101
414
271
282
Income on Assets
2,456
4
175
1,539
528
211
Less: Saving
1,595
9
276
1,126
256
-72
-29
1,710
108
-1,742
-246
141
2
611
51
-673
-103
116
-31
1,099
-18
-1,155
-52
95
0
0
75
86
-91
-70
Transfers
Public
Private
Bequests
Asset-based reallocations are equal to asset income (profits, interest
income and rent) less saving. Age groups with negative asset reallocations
are saving in excess of their asset income.
NT Flow Account, Aggregate. Taiwan, 1998 (NT$ billion), nominal
Age
Total
0-19
20-29
30-49
50-64
65+
Reallocations
832
1,704
7
-1,329
25
424
Asset-based Reallocations
861
-5
-101
414
271
282
Income on Assets
2,456
4
175
1,539
528
211
Less: Saving
1,595
9
276
1,126
256
-72
-29
1,710
108
-1,742
-246
141
2
611
51
-673
-103
116
-31
1,099
-18
-1,155
-52
95
0
0
75
86
-91
-70
Transfers
Public
Private
Bequests
Net transfers consist of public transfers (cash transfers + in-kind transfers
less taxes) and private transfers (mostly familial transfers). Positive values
imply that inflows exceed outflows.
Issue 1: Lifecycle Deficit,
Children
• Does the lifecycle deficit per child increase
as the number of children declines?
– Becker quality-quantity tradeoff
– If so, the decline in fertility will have a smaller
effect on capital accumulation.
– However, if consumption is higher because
parents are spending more on education, then
human capital will increase as the number of
children declines.
Per Capita Lifecycle Deficit, Japan
2004, Survival Weighted
1.4
Relative to Yl(30-49)
1.2
1
Child LCD
15.1 years of
prime-adult
labor
Elderly LCD
10.5 years of
prime-adult
labor
0.8
0.6
0.4
0.2
0
0
10
20
30
40
50
60
70
80
90
Age
Note. US 1985-89 life table used for all countries.
LCD Children/Yl(30-49)
Tradeoff: Spending per Child and
Number of Children, 13 Countries
16
15
14
13
12
11
10
9
8
7
6
y = -7.7914x + 15.473
R2 = 0.6125
0.2
0.4
0.6
0.8
1
Child Dependency Ratio: N(0-19)/N(20-59)
1.2
LCD Children/Yl(30-49)
Tradeoff: Spending per Child and
Number of Children, 13 Countries
16
15
14
13
12
11
10
9
8
7
6
Jp
US
Tw
Ch
SK Th
Sw
Fr
Ur
CR
Indo
In
Ph
0.2
0.4
0.6
0.8
1
Child Dependency Ratio: N(0-19)/N(20-59)
1.2
Issue 2: Lifecycle Deficit, Elderly
• Does the lifecycle deficit per elderly
decline as the number of elderly rises?
– Preston and others argue yes – political
power.
– If so, the rise in the old-age population will
have a larger effect on capital accumulation.
LCD Elderly/Yl(30-49)
Tradeoff: Spending per Elderly and
Number of Elderly, 13 Countries
12
11
10
9
8
7
6
5
4
3
2
y = 11.993x + 4.5285
R2 = 0.4266
0.1
0.15
0.2
0.25
0.3
0.35
0.4
Old-age Dependency Ratio: N(60+)/N(20-59)
0.45
0.5
LCD Elderly/Yl(30-49)
Tradeoff: Spending per Elderly and
Number of Elderly, 13 Countries
12
11
10
9
CR
Tw
8
Th
Ch
7
SK
6
5 Ph In
4 Indo
3
2
0.1
0.15
0.2
US
Ur
Jp
Fr
Sw
0.25
0.3
0.35
0.4
Old-age Dependency Ratio: N(60+)/N(20-59)
0.45
0.5
Issue 3. Support Systems for the
Elderly.
• How do they differ across countries?
• Do Asian or African countries rely more on
familial transfers and Western countries
more on public transfers?
• Does the expansion of public systems
crowd out saving as hypothesized by
Feldstein?
• Or familial transfers?
Saving
Capital-based
transformation
Social welfare
transformation
Traditional
society?
Familial
Transfers
Public
Transfers
Old-Age Reallocation Systems
Saving
Mixed
Strategies
50-50 familial
and saving
50-50 saving
and public
50-50 familial
and public
Familial
Transfers
Old-Age Reallocation Systems
Public
Transfers
Saving
Public transfers
and familial
transfers are
substitutes.
Familial
Transfers
Public
Transfers
Old-Age Reallocation Systems
Saving
Feldstein: Public transfers to
the elderly crowd out saving.
Familial
Transfers
Public
Transfers
Old-Age Reallocation Systems
Reallocation System, 65+, Selected
Countries for a Recent Year
Assets
Mexico
Philippines
1/3
US
2/3 Thailand
S. Korea
Japan
2/3
Costa Rica
1/3
Taiwan
Finland
Austria
Family
Transfer
s
2/3
1/3
Public
Transfer
s
Thailand Elderly by Age (2004)
Assets
65
70
1/3
2/3
75
80
85
1/3
Family
Transfer
s
2/3
90+
2/3
1/3
Source: Chawla (2008)
Public
Transfer
s
South Korea (2000)
Assets
65
Similar to Thailand but
public transfers
covering 1/3 of support
1/3
2/3
70
75
2/3
80
1/3
85
90+
Family
Transfer
s
2/3
1/3
Public
Transfer
s
Source: National Transfer Accounts
Mexico (2004)
Mexico like S Korea
except family transfers
play a less signifcant role.
70
Assets
75
80
1/3
2/3
85
90+
2/3
1/3
Family
Transfer
s
2/3
1/3
Public
Transfer
s
Source: Mejia-Guevara (2008)
United States (2003)
Unlike previous examples
public transfers increase
with age rather than
familial transfers
Assets
65
70
1/3
75 80
85
2/3
90+
2/3
1/3
Family
Transfer
s
2/3
1/3
Public
Transfer
s
Source: Lee, Lee & Mason (2007)
Japan (2004)
Intermediate case. Both
familial transfers and
public transfers increase
with age.
Assets
1/3
65
2/3
70
75
2/3
80
1/3
85
90+
Family
Transfer
s
2/3
1/3
Public
Transfer
s
Source: Ogawa, Mason, Chawla & Matsukura (2008)
Austria (2000)
Extreme case. No upward
familial transfers; little reliance
on asset-based reallocations.
Public sector dominates.
Assets
1/3
2/3
2/3
1/3
65
70
75
80
Family
Transfer
s
2/3
1/3
Public 85
Transfer 90+
s
Source: Fuernkranz-Prskawetz & Sambt (2008)
Conclusions
• Decline in fertility may
– Lead to more consumption by children
reducing the effect on saving
– Lead to more spending on education for
children leading to second demographic
dividend due to human capital investment.
– Influence familial support systems in ways
that have not yet been explored.
Conclusions
• Aging may lead to
– Larger per capita lifecycle deficit reinforcing
the effects of aging
– The economic effect will be some unknown
combination of the three:
• Increase saving and economic growth
• Increase the size of public programs and budget
deficits; or
• Increase the burden on families which support the
elderly.
Conclusions
• The support systems for the elderly are
varied and do not conform to simple
regional classifications.
• The elderly in Costa Rica and Japan are
relying on saving and public transfers.
Have public programs crowded out familial
transfers?
• In Taiwan and Thailand, the familial
support system is still important.
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 (ronlee), Co-Director
Mason, Andrew (amason), Co-Director
Auerbach, Alan (auerbach)
Miller, Tim (tmiller)
Lee, Sang-Hyop (leesang)
Donehower, Gretchen (gstockma)
Ebenstein, Avi (ebenstei)
Wongkaren, Turro (turro)
Takayesu, Ann (takayesa)
Boe, Carl (cboe)
Comelatto, Pablo (pabloc)
Sumida, Comfort (comfort)
Schiff, Eric (eric)
Stojanovic, Diana (diana)
Langer, Ellen (erlanger)
Chawla, Amonthep (beet)
Pajaron, Marjorie Cinco (pajaron)
Taiwan
Key Institution: The Institute of Economics,
Academia Sinica, Taipei, Taiwan.
Tung, An-Chi(actung), Country Leader
Lai, Mun Sim (Nicole)(munsim)
Liu, Paul K.C.(kliu)
Andrew Mason
Japan
Key Institutions: Nihon University Population Research
Institute and the Statistics Bureau of Japan, Tokyo, Japan.
Ogawa, Naohiro(ogawa), Country Leader
Matsukura, Rikiya(matukura)
Fukui, Takehiro(jstat)
Kondo, Makoto(kondo)
Akasaka, Katsuya(akasaka)
Nemoto, Kazuro(nemoto)
Makabe, Naomi(makabe)
Sato, Ryoko(rsato)
Ogawa, Maki(mogawa)
Murai, Minako(murai)
Obayashi, Senichi(obayashi)
Suzuki, Kosuke(Suzuki)
Australia
Key Institution: Australia National University
Jeromey Temple, Country Leader
Brazil
Turra, Cassio(cturra), Country Leader
Lanza Queiroz, Bernardo(lanza)
Renteria, Elisenda Perez(elisenda)
Chile
Key Institution: United Nations Economic Commission for
Latin America and the Carribean, Santiago, Chile
Bravo, Jorge(jbravo2), Country Leader
China
Key Institution: China Center for Economic Research,
Beijing, China.
Ling, Li(Lingli), Country Leader
Chen, Quilin(Chen)
France
Wolff, Francois-Charles(wolff), Country Leader
Bommier, Antoine(bommier)
Thailand
Key Institution: Economics Department, Thammasat University.
Phananiramai, Mathana(Mathana), Country Leader
Chawla, Amonthep (Beet)(amonthep)
Inthornon, Suntichai(Suntichai)
India
Key Institution: Institute for Social and Economic Change, Bangalore
Narayana, M.R.(narayana), Country Leader
Nanak Kakwani(kakwani)
Ladusingh, L.(ladusingh)
Mexico
Key Institution: Consejo Nacional de Población
Partida, Virgilio (virgilio), Country Leader
Mejía-Guevara, Iván(ivan)
Indonesia
Key Institution: Lembaga Demografi, University of Indonesia, Jakarta, Indonesia.
Maliki(maliki), Country Leader
Wiyono, Nur Hadi(nhwiyono)
Nazara, Suahasil(nazara)
Chotib(chotib)
Philippines
Key Institution: Philippine Institute for Development Studies.
Racelis, Rachel H.(Rachel), Country Leader
Salas, John Michael Ian S.(Salas)
Sweden
Key Institution: Institute for Future Studies, Stockholm, Sweden.
Lindh, Thomas(lindh), Country Leader
Johansson, Mats(Mats)
Forsell, Charlotte (charlotte)
Uruguay
Bucheli, Marisa(marisa), Country Leader
Furtado, Magdalena(furtado)
South Korea
An, Chong-Bum (cban), Country Leader
Chun, Young-Jun (yjchun)
Lim, Byung-In (billforest)
Kim, Cheol-Hee (Kimch)
Jeon, Seung-Hoon (jsh1105)
Gim, Eul-Sik (kuspia)
Seok, Sang-Hun (good)
Kim, Jae-Ho (ksud)
Austria
Key Institution: Vienna Institute of Demography
Fuernkranz-Prskawetz, Alexia (alexia), Country Leader
Sambt, Joze(joze)
Costa Rica
Key Institution: CCP, Universidad de Costa Rica
Rosero-Bixby, Luis(lrosero), Country Leader
Slovenia
Sambt, Joze(joze), Country Leader
United States
Key Institution: Center for the Economics and Demography of Aging
Lee, Ronald(ronlee), Country Leader
Miller, Tim(tmiller)
Ebenstein, Avi(ebenstei)
Boe, Carl(cboe)
Comelatto, Pablo(pabloc)
Donehower, Gretchen(gstockma)
Schiff, Eric(eric)
Langer, Ellen(erlanger)
The End
Support:
National Institutes of Health
NIA, R01-AG025488
NIA, R37-AG025247