Development of NTA (National Transfer Accounts) Sang-Hyop Lee - PowerPoint PPT Presentation

Development of NTA (National Transfer Accounts) Sang-Hyop Lee University of Hawaii at Manoa East-West Center November 13, 2014 NTA 10, Beijing, PRC

I O L R S F E R C C O U S

N I O N L R N S F E R C C O U N S

N T I O N L T R N S F E R C C O U N T S

N A T I O N A L T R A N S F E R A C C O U N T S

Two Directors

Key Issues • How population change influences the economy and society (current and future) • What policies can be pursued to influence the outcome—research provides policy tools!

National Transfer Accounts • The goal is to improve our understanding of the generational economy • Describes the age patterns of economic activity and the economic relations between the generations • Quantifies how each age group acquires and uses economic resources • Constructed using existing data (population estimates, surveys, administrative records, macroeconomic data) • Consistent with UN System of National Accounts.

Many Offspring (TFR=over 100)

NTA is comparative: Regional structure NTA Members Asia-Pacific Americas Europe Africa Australia Argentina Austria Benin Bangladesh Brazil Finland Ghana Cambodia Canada France Kenya China Chile Germany Mozambique India Colombia Hungary Nigeria Indonesia Costa Rica Italy Senegal Japan El Salvador Luxembourg South Africa Philippines Jamaica Netherlands South Korea Mexico Poland Taiwan Peru Russia Thailand United States Slovenia Vietnam Uruguay Spain Sweden Turkey United Kingdom

The continuing effort has been supported by many funders National Institute on Aging (NIA) • • Bill and Melinda Gates Foundation • International Development Research Center (IDRC), Canada • UN Fund for Population Activities (UNFPA) • UN Population Division East-West Center, Hawaii • • Center for the Economics and Demography of Aging, UC Berkeley • Asian Development Bank • Japan: MEXT.ACADEMIC FRONTIER • MacArthur Foundation European Union • • In-country support from governments and other funders in many countries

Global Meetings 10 th Beijing, China, Nov 10-14, 2014 9 th Barcelona, June 2013 8 th Rio, Brazil, December 2011 7 th Honolulu, June 11-12, 2010 6 th Berkeley, January 9-10, 2009 5 th Seoul, Korea, November 5-6, 2007 4 th Berkeley, January 19-20, 2007 3 rd Honolulu, January 20-22, 2006 2 nd Berkeley, January 2005 1 st Berkeley, January 2004

After more than a hundred articles by project members, the first book from the project is out

Manuals, more articles, etc.

Outcomes from NTA • Data improvement • Research and policy awareness – Comparative or country specific • Capacity building – Global meetings – Regional meetings – Technical/training workshops 17

The Economic Lifecycle 600 Labor Income Per Capita Consumption and Labor 500 400 Consumption Income 300 200 Large deficits at young and 100 old ages. 0 0 20 40 60 80 Age

Aggregate flows, Nigeria 250000 Net cost of children (<25) is 87% of the total labor 200000 income of adults 25+ Naira (millions) 150000 Net cost of elderly is very 100000 small 50000 0 0 10 20 30 40 50 60 70 80 90+ Age Consumption Labor income

Human capital spending, Nigeria 250000 200000 Naira (millions) 150000 100000 50000 Only 20% of 0 spending on 0 10 20 30 40 50 60 70 80 90+ children goes to human capital Age (health and Consumption Human capital spending Labor income education)

Fertility/human capital tradeoff Africa Human capital spending (% average South, Southeast Asia 600 East Asia annual income age 30–49) Europe, Australia, United States 500 Latin America, Caribbean 400 300 200 100 0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Total fertility rate (children per woman) Updated from NTA database www.ntaccounts.org

Support ratio, China 1 Net swing of 1.2% per year in per capita growth due to population age 0.9 structure 0.8 0.7 Plus 0.8% per Minus 0.4% year per year 0.6 1940 1960 1980 2000 2020 2040 2060

Annual growth of support ratio, NTA economies, 2010–2050

The economic lifecycle, aggregate flows (United States) 250000 200000 US$ (millions) 150000 100000 50000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age Consumption Labor Income

Sources of funding consumption (support system) • Labor income • Transfers – Familial transfers – Public transfers • Social security system • Asset-based reallocations – Interest, dividends, rent from personal assets – Home – Dis-saving

Saving Capital-based transformation Social welfare transformation Traditional society? Familial Public Transfers Transfers Evolution of old-age support system

IN Assets PH MX US 1/3 TH 2/3 KR UY JP ES DE CR BR 2/3 1/3 TW CL CH SI AT Public HU SE transfers Family transfers 2/3 1/3 Europe & US Latin America Asia

Consumption by Sector (Korea) Public Education Private Education Public Other Private Other 9,000,000 8,000,000 Public Health Private Health 7,000,000 6,000,000 Korean Won 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age

Consumption by Sector (Sweden) 500,000 450,000 400,000 Public Education Private Education 350,000 Public Other Private Other Swedish Krona 300,000 Public Health Private Health 250,000 200,000 150,000 100,000 50,000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90+ Age

Social welfare target (Thailand), constrained

Summary: NTA research areas • Demographic dividend • Economic growth and saving Fiscal sustainability • Intergenerational equity • Implications for gender issues and inequality • Human resources (healthcare and • education) • Responsibilities of private vs. public sector • Retirement and pension issues

Concluding remarks • Our economic systems are being tested by unprecedented changes in population age structure • Stakes are very large: Economic growth, generational equity, economic security for children and elderly, and sustainability of support systems • Complex systems are involved: Governments, labor markets, families, financial markets, and health-care systems • It is essential that policy be informed by the best possible data linking population and the macroeconomy

Thank you