Transcript PPT

DISTRIBUTION OF INCOME,
CONSUMPTION, SAVING
AEG MEETING
WASHINGTON DC, 8-10 SEPTEMBER 2014
Presented by Jennifer Ribarsky (OECD)
Background
• How to arrive at economic growth without people dropping
out
-> need for information on how income, consumption and wealth are
distributed across households
• Main issues:
– Existing distributional information from micro sources:
• Often focus on one dimension
• In most cases no consistent time series
• Not following international standards, especially related to wealth
– National accounts data on households hardly provide any
distributional information
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Background
• Early 2011: OECD-Eurostat Expert Group (EG DNA)
• Mandate: study feasibility to arrive at an internationally comparable
methodology for generating distributional information consistent
with national accounts
• Members: 25 countries, ECB, Luxembourg Income Studies
• Organisation of the work:
– Phase 1 (2011): comparison between micro and macro data sources
on households’ income, consumption and wealth => to better
understand similarities and divergences between both data sources
– Phase 2 (2012): allocation of national account totals to groups of
households using a range of micro sources; derivation of disparity
measures on income, consumption and saving, for a given year
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Main results of first EG DNA
• Sharing knowledge across countries and between micro and
macro experts
• Better understanding of NA concepts and compilation
procedures, household micro data collection, and differences
between both of them
• Compilation of experimental disparity measures across
households groups consistent with NA estimates:
– for a range of OECD countries
– based on common templates and methodology
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Savings* as a percentage of
adjusted disposable income
60%
40%
20%
Australia 2009-10
0%
France 2003
-20%
Korea 2009
-40%
Mexico 2010
Netherlands 2008
-60%
New Zealand 2006/07
Slovenia 2008
-80%
United States 2010
-100%
Q1
Q2
Q3
Q4
Q5
*Difference between adjusted disposable income and actual final consumption plus the change in
net equity of households in pension funds.
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Transactions and transfers between
households of different quintiles
Impact of transfers between households on saving rates
positive values refer to higher saving rates after transfers were taken into account
difference of saving rates before and after
transfers between households
Q1
Q2
Q3
Q4
Q5
Australia
-0.1%
0.1%
0.5%
0.2%
-0.2%
France
2.6%
0.7%
0.4%
-0.4%
-1.1%
Korea
0.5%
0.7%
-0.6%
-0.7%
0.4%
Netherlands
-1.6%
0.8%
0.5%
0.2%
-0.3%
Unites States
-2.2%
0.0%
0.2%
0.1%
0.0% 6
Economic theories of consumption
• Milton Friedman’s Permanent Income Hypothesis (PIH)
– emphasizes the attempts of the individual to smooth its
consumption over time, adjusting consumption and saving levels
according to an expected long-term permanent income, and
therefore evaluating income shocks by their persistence: smoothing
out temporary fluctuations in income, and adjusting consumption
levels to income shocks that are perceived to be long lasting.
• Modigliani and Brumberg’s Life Cycle Hypothesis (LCH)
– states that individuals plan their consumption behaviour over their
lifetime: in their early (student) years they may consume more than
their income (for example on their education), then in their most
productive (highest income earning years) they pay back the
accumulated debt and save for their retirement, and finally they dissave as pensioners (use up the accumulated assets).
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Average age of head of household by
equivalised disposable income quintile
60
AUS
FRA
55
KOR
MEX
50
NLD
SVN
45
USA
40
Q1:
Q2:
Q3:
Q4:
Q5:
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Statistical issues
• Income related to the non-observed economy
underestimated for the lower income quintiles?
• Inconsistent responses (case of France)
• Imperfect quintile allocation of households for
consumption components
•
Imputations related to owner occupied dwellings
(primarily due to delineation of what is included in
intermediate consumption (such as FISIM on mortgages
and maintenance and repairs))
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Goals of EG DNA (extended mandate)
• To produce information on income and consumption
for a more recent year, via a streamlined
questionnaire
– To assess the robustness of the assumptions made
– To assess the techniques developed to link micro and macro
data
• To develop and evaluate methods and sources for
extrapolating distributional dynamics from
benchmark years using more timely available
aggregate statistics
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Milestones of EG DNA (extended
mandate)
• Expert group met in April 2014
– To discuss its mandate and organise the work
– Results from previous exercise discussed
(with focus on negative saving rates and STiK)
• September 2014 OECD secretariat will
issue a redesigned questionnaire template
for the collection of data and metadata
• Next expert group meeting June 2015
• Final report December 2015
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Long term vision
• To make readily available income, consumption
and savings of households by income quintiles ;
– Consistently with the corresponding national
accounts totals
– Ideally as part of the normal SNA/statistics
production process
• This information is crucial to be able to add a
distributional dimension to macroeconomic
analysis
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Thank you for your attention!
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