What's New
Global NTA Meeting and Workshop - Intergenerational Approaches to Social and Economic Policy
Cedeplar - Universidade Federal de Minas Gerais
Belo Horizonte, Brazil, December 5-9, 2011
Rio de Janeiro, Brazil, December 12, 2011
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.
NTA Bulletin
The second issue of NTA Bulletin is available now! The topic of this issue is the role of government in resource transfers. Download Bulletin_2_2011 April 2011.
Changes in population age structure are occurring more quickly today than at any time in human history, posing both opportunities and challenges for policymakers. Policymakers need to understand the likely consequences of demographic change in their own societies in order to develop sustainable programs in areas of healthcare, education, pensions and policies that foster economic growth and generational equity.
To help fill this information need, the NTA project has initiated a series of short publications that summarize the results of NTA research for a broad policy audience. This new series is being produced with support from the International Development Research Centre (IDRC) of Canada.
UPDATE: The Spanish edition of Bulletin 1 is now available!: Bulletin_1_2011_Espanol
See more at NTA Bulletin including links to other issues.
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
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.
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.