National Transfer Accounts
The National Transfer Accounts (NTA) project is developing a system to measure economic flows across age groups in a manner consistent with National Income and Product Accounts. The accounts measure how each age group produces, consumes, shares, and saves resources. Two forms of economic flow are distinguished, transfers between age groups and the use of assets accumulated earlier in life. These flows arise primarily because of a fundamental feature of the economic lifecycle: children and the elderly consume more than they produce through their labor. NTA provides estimates of the components of the economic lifecycle and the interage flows that inevitably arise. These flows occur through government programs and through families and other private institutions.
When complete National Transfer Accounts will provide estimates with sufficient historical depth to study the evolution of intergenerational transfer systems; the consequences of alternative approaches to age reallocations embodied in public policy with respect to pensions, health care, education and social institutions, e.g., the extended family; and the social, political, and economic implications of population aging.
What's New
Public Release of NTA Lifecycle data
The NTA project has released consumption and labor income data for 23 countries. To download the data in excel format, and to see interactive visualizations, click the following link:
Consumption and Labor Income Profiles Release
This, and future data releases can be found under the "NTA Data" link in the menu on the left.
World Bank/DRC China 2030 report
The China 2030 Report (so-called Big Ideas) was launched by World Bank President Robert B. Zoellick on February 27th, 2012, at a workshop at the State Guesthouse. The Chinese Minister of Finance, International Cooperation Department (DRC), and many others were in attendance. The team is also briefing Vice Premier Li Keqiang, and likely will also brief the Premier.
The joint report with DRC (the think-tank attached to China's State Council) contains an overview, and five “pillar” reports. Supporting Report 4 is about social issues, and contains information provided by the National Transfer Accounts (NTA) project.
Carl Mason and Qiulin Chen from the National Transfer Accounts project prepared projections of China's public and private expenditures on health, pensions and education to 2050. Relying on World Bank and UN population and economic forecasts, and NTA data, their projections disaggregate expenditures between rural and urban residents.
The graph below compares the proportion of China’s GDP spent on health care in 2010 (by age of recipient) to the proportion that is projected to be spent in 2030. It illustrates the sizeable effects that changing demography – both population aging and rural to urban migration – can have on social programs. As the graph illustrates, spending on health care in China is projected to rise to 8.1 percent in 2030 from 5.2 percent in 2010.
NTA calculations also show that “public spending on pensions as a share of GDP could double and public spending on health increase by over 50 percent simply as a result of demographic trends”. The report emphasizes the need to reduce some elements of public spending while expanding revenue sources to accommodate these social obligations.
NTA Bulletin
Bulletin 3.
The third issue of NTA Bulletin is available now! It is titled "The economic consequences of population aging. Report on a technical policy seminar", and may be downloaded at the following link: NTAbulletin3Final December 2011.
On 19–20 September 2011, the United Nations Population Fund (UNFPA) and the East-West Center (EWC) held a Technical Policy Seminar on the Economics of Aging. This issue of the NTA Bulletin summarizes presentations and discussion from the seminar.
NTA measures the direct effect of population age structure on economic growth in terms of the support ratio—the effective number of producers relative to the effective number of consumers. The support ratio changes in a systematic way over the demographic transition, as first the working-age population and then the elderly population increase in size relative to other age groups.
Over the next 20 years, many developing economies will experience large increases in their support ratios as their working-age populations expand. One immediate challenge for policymakers is to insure that the increase in the potential workforce leads to greater employment in productive jobs.
In industrialized economies, where the support ratio has reached its peak or has already begun to decline, policymakers face two challenges. The first is how best to sustain economic growth with a decline in the number of workers relative to other age groups, and the second is how to sustain or reform public programs that address the needs of growing elderly populations.
Seminar participants discussed the impact of population aging on pension and healthcare systems, including forecasts of rising expenditures and the pros and cons of various approaches to contain costs. Much of the discussion also focused on the macro-economic effects of population aging, including structural changes in markets and the impact of older populations on patterns of saving and investment. The participants did not agree on one important question: Whether higher saving or higher consumption is better for economic growth. They did agree, however, that increased saving in the midst of a deep recession is unlikely to lead to more rapid economic growth and that creating a favorable investment environment is essential to meeting the needs of an aging society.
Bulletin 2.
Transferring resources between age groups: What roles do governments play?
NTA Bulletin 2, May 2011.Download Bulletin_2_2011 April 2011.
Bulletin 1.
National Transfer Accounts: A new way to look at population change and economic growth.
Download Bulletin_1_2011 January 2011
en Espanol Bulletin_1_2011_Espanol
See more at NTA Bulletin including summaries and links to all issues.
New Book: Population aging and the generational economy: A global perspective
Ronald Lee and Andrew Mason, lead authors and editors
Direct purchase from Edward Elgar
Free download from IDRC
Over coming decades changes in population age structure will have profound implications for the macroeconomy, influencing economic growth, generational equity, human capital, saving and investment, and the sustainability of public and private transfer systems. How the future unfolds will depend on key actors in the generational economy: governments, families, financial institutions, and others. This ground-breaking book draws on a new and comprehensive conceptual framework—National Transfer Accounts–for quantifying the economic lifecycle and economic flows across generations. The book is the result of a substantial seven year research project involving over 50 economists and demographers from Africa, Asia, Europe, Latin America and the Unites States. See more at Population aging and the generational economy: A global perspective.
Global NTA Meeting and Workshop - Intergenerational Approaches to Social and Economic Policy
Cedeplar - Universidade Federal de Minas Gerais
Workshop
Presentations are now available online at the following link (scroll down): Belo Horizonte, Brazil, December 5-9, 2011
Conference
Rio de Janeiro, Brazil, December 12, 2011. Download the agenda: agenda_rio
NTA Data Sheet
A summary of the project's finding with selected tables and graphs is now available in the form of wallchart. Download the NTA Data Sheet.
Presentations
In April, Andrew Mason and Ronald Lee gave a talk at the Woodrow Wilson International Center for Scholar. The title of their presentation was "Dividend or Deficit? The Economic Effects of Population Age Structure." See here for abstract and the video of the presentation.
The Austrian team recently gave some presentations on the Austrian NTA and it has also been reported as one of the subjects of the month at the Austrian Academy of Sciences. Link to the report (in German).
In mid March, Ronald Lee and Andrew Mason presented a paper at the International Conference on Challenges of Population Ageing in Asia, held in New Delhi. The conference is organized under the auspice of the National Academies. See the list of participants of the conference: NAparticipants.
In the News
The March 24, 2012 issue of The Economist published an article on Brazil's pension plan. The Brazilian expert cited in the article, Bernardo Queiroz is part of the NTA research team. An excerpt from the article: "According to Bernardo Queiroz of the Federal University of Minas Gerais, without reforms, by 2050 they would have to reach a crushing 86% to keep the system going." Access the article at: http://www.economist.com/node/21551093
An International Development Research Centre article "Balancing the needs of young and old" by Louise Guénette talks about NTA, and some specific examples of using NTA research around the world. “NTA research is important because it helps governments weight the needs of different age groups when designing policies to protect the most vulnerable generations,” says IDRC senior program specialist Edgard Rodriguez. Access the article at: http://www.idrc.ca/EN/Resources/Publications/Pages/ArticleDetails.aspx?PublicationID=1075][
Rohinton Medhora, Vice-President of Programs at Canada’s International Development Research Centre writes about the NTA book Population Aging and the Generational Economy and his related observations in his blog at [ http://blog.idrc.ca/medhora/new_posts/the-generational-economy ] .
Dr. Sonalde Desai published an article in India's Business Standard newspaper based on the NTA book "Population Aging and the Generational Economy". Article is available here: [ http://www.business-standard.com/india/news/sonalde-desai-afterdemographic-dividend-/460047 ]
Nigeria's "This Day" newspaper had a news item on Nigeria's NTA Dissemination Workshop on 27 September 2011. The article's focus is on a peculiarly Nigerian malaise; overdependence on asset income: oil and a weak tax base. NTA Nigeria News01.
Joze Sambt and his colleagues wrote an article in Delo, a Slovenian newspaper. The article was on the importance of pension reform that Slovenian government passed in December 2010, but had been put under referendum which was held on June 5. The referendum result was against the reform. See the article Sobotna-priloga_Sambt-Cok (in Slovenian).
Andy Mason wrote an editorial at China Daily: Economics of aging population. In addition, Honolulu's Star-Advertiser runs an article based on the NTA project findings: Aging of Asia .
NTA researchers Ron Lee and Jorge Bravo were part of a panel on aging population in a conference organized by the International Development Research Center (CDRI) in Ottawa, Canada. The event was covered by Lokole magazine.
Turkey joins the NTA Project
We welcome Aylin Seckin and Patrick Georges to our project. The key institution for Turkey is Istanbul Bilgi University.
Vietnam joins the NTA Project
We welcome Dr. Nguyen Lan Huong and Dr. Giang Thanh Long to our project. The key institution for Vietnam would be the Institute of Labour Science and Social Affairs.
Italy joins the NTA Project
We welcome Graziella Caselli, Francesco Candelor Billari, Annunziata Nobile, Emilio Zagheni, and Marina Zannella to our project. The key institution for Italy would be the University of Rome.
Highlights
Trade off between human capital spending and fertility
Recent Publications
Narayana, M.R. 2011. Lifecycle deficit and public age reallocations for India's elderly population: evidence and implications based on National Transfer Accounts. Journal of Population Aging, June.
Abstract: Using the computational framework of National Transfer Accounts, this paper offers new results and explanations on the role of public support to India’s elderly population in 2004–05. New results refer to computed (a) lifecycle deficit (LCD) based on age profiles of aggregate labour income and consumption and (b) public age reallocations based on age profiles of transfers and asset based reallocations. The results show that the LCD of elderly population is about 34% of the LCD of all ages, or 3.74% of GNP. Surprisingly, net public transfers to elderly individuals are strongly negative and asset-based allocations are financed by dissaving, because the taxes paid by the elderly population substantially exceed the benefits they receive and they pay both interest on previously accumulated public debt and paying off that debt. Public age reallocations finance elderly individuals’ consumption by less than 0.50% and the largest burden of financing public transfers falls on elderly for whom the net public transfers is −13.33% of labour income. The heavy burden on the elderly population is attributable in part to India's tax system and partly on the absence of programs that provide support to elderly individuals. If the present private sector's support for elderly individuals is not sustainable due to changes in the social obligations and in the absence of a universal pension scheme, a reduction in the direct tax outflows for the elderly population may be a policy imperative in India's public age reallocations.
Ronald Lee and Andrew Mason. 2011. The price of maturity. Finance and Development, 48(1).
Abstract: Over the next few decades population aging will begin developing in many countries and become much more challenging in high-income countries. Population aging has profound implications for the economy because of the economic life cycle, characterized by extended periods of, “dependency,” at young and old ages. The first order economic effects of population aging are captured by the support ratio, the effective number of workers divided by the effective number of consumers. Support ratios constructed using National Transfer Account data show that for many developing countries changing age structure is boosting economic growth by as much as one percent per year. In high-income countries, however, economic growth could be depressed by as much as one percent per year in the absence of effective responses by individuals and by governments. To the extent that the elderly are self-sufficient, relying on continued work and the accumulation of assets to support themselves in old-age, population aging may produce a second demographic dividend, a further spur to economic growth. Comprehensive estimates of the support system for the elderly show great variation across countries, however, in the extent to which the elderly are relying on themselves or depending on younger generations to fund their material needs in old-age. Postponing retirement is an important response to population aging.
Ronald Lee and Andrew Mason. 2011. Generational Economics in a Changing World. Population and Development Review 37 (Supplement) :115-142.
Abstract: Hunter-gatherers evolved a life strategy of food sharing within and across generations, including transferring surplus food to children to support their long period of nutritional dependency. In intensive agriculture, the elderly became net consumers, when they were sustained in part by food transfers from their adult children. At the same time, assets became more important, providing an alternative support for the retired. These trends continued as agriculture gave way to industry. A growing public sector reinforced downward transfers with public education and health care for children. With development, transfers to the elderly became increasingly important, their fiscal effect exacerbated by aging populations. At the same time, the growth of capital and financial institutions provided new forms of asset accumulation along with private pensions. These two trends reduced the role of the family in providing for the elderly. Our evolved sociality is now expressed through welfare state redistributive programs, and intensifying public and private investment in children. But population aging and more public programs for the elderly has led to a reversal in the direction of resource flows from downward to upward. The old age dependency ratio is projected to double or triple in coming decades in the rich industrial countries, and the public costs of the elderly may increasingly compete with investments in children through the public sector budget constraint. It remains to be seen whether the elderly will opt to work until older ages, and whether the rapid growth of health care expenditures will be restrained.
Miguel Sanchez Romero, Concepcion Patxot, Elisenda Renteria, and Guadalupe Souto. 2010. From Transfers to Capital: Analyzing the Spanish Demand for Wealth using NTA.
Abstract: Inter- and intra-family transfers are a very important part of our daily economic activity. These transfers, whether familial or public, may influence our economic decisions to the same extent that financial markets do. In this paper, we seek to understand how the Spanish stock of capital will evolve if the set of intergenerational transfers observed in year 2000 are maintained in the future. With that aim in mind, we have implemented a general equilibrium overlapping generations model with realistic public and familial transfers drawn from the National Transfer Accounts project (NTA). Given that familial transfers go from parents to children, and public transfers go from children to parents, we show that the Spanish baby boom and baby bust will make the second demographic dividend temporary, and that welfare will be reduced from 2040 onwards.
To see other papers, go to Publications section.
Members and Organization
Support for this project has been provided by the National Institute on Aging: NIA, R01 AG025488 and NIA, R37 AG025247; the John D. and Catherine T. MacArthur Foundation; the International Development Research Center (IDRC); the United Nations Population Fund (UNFPA); and the Academic Frontier Project for Private Universities: matching fund subsidy from MEXT (Ministry of Education, Culture, Sports, Science and Technology), 2006-10, granted to the Nihon University Population Research Institute.
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