Population age structures are changing all over the world, with fewer children and more old people than in the past. Analysis of these demographic changes and their likely consequences can help policymakers develop sustainable programs in areas of healthcare, education, and pensions as well as policies that foster economic growth and equity among generations and age groups.
The National Transfer Accounts (NTA) project addresses the impact of demographic change on economic growth, inequality, public finances, and the economic resources available to children and the elderly. The project includes research teams in more than 50 countries, with core activities based at the East-West Center and the Center on the Economics and Demography of Aging at the University of California, Berkeley. By providing estimates of income, consumption, saving, and other resource flows for each age group, NTA adds an important dimension to measures of Gross Domestic Product (GDP) and other widely used indicators that are critical for formulating economic policy.
In 2011, the NTA project initiated the NTA Bulletin, a series of short publications that summarize the results of NTA research for a broad policy audience. This series has been produced with support from the International Development Research Centre (IDRC) of Canada, the United Nations Population Fund (UNFPA), and the Bill & Melinda Gates Foundation.
NTA Bulletin 11
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Counting Women's Work: Measuring the Gendered Economy in the Market and at Home
NTA Bulletin 11, January 2017
The Counting Women’s Work (CWW) initiative is measuring the full economic contribution of women, including paid work in the marketplace and unpaid care and housework at home. This issue of the NTA Bulletin describes the project and reports some illustrative results from Ghana, Mexico, Senegal, the United States, and Vietnam. These examples demonstrate how CWW analysis makes it possible to quantify the differences between men and women in market work and wages, the excess total work time that most women spend relative to men, the potential barrier that household responsibilities represent to women’s education and career development, and the “hidden” costs of children.
NTA BULLETIN 10
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Population Change and the Economic Security of Older People in Asia
NTA Bulletin, No. 10, September 2016
Populations are growing older everywhere in the world, but the pace of population aging in Asia is unprecedented, primarily linked to rapid fertility decline. Asia’s rapid population aging has led to policy concerns about how the region’s growing elderly populations will be cared for and supported. How many of today’s elderly remain in the workforce, and how much do they earn? To what extent do they support themselves from assets acquired during their working years? How do families and governments meet the needs of elderly people who consume more than they produce? And what does the future hold?
Analysis by the National Transfer Accounts (NTA) project suggests that capital accumulation can potentially make a strong contribution toward meeting the needs of Asia’s growing elderly populations. If the needs of the elderly are met through greater reliance on saving during the working years, then population aging will lead to an increase in assets that also has favorable implications for economic growth. Investment in human capital is another important response to population aging. Improvements in the productivity of each worker—fostered by investment in child health and education—can help maintain economic growth even as the working-age population shrinks relative to the elderly.
The sheer speed and scale of population aging in Asia add a sense of urgency as policymakers start planning for a grayer future. Leaders would do well to learn from the policy mistakes of advanced economies, including fiscally unsustainable pension systems and rigid requirements for early retirement. Once inappropriate old-age support programs become entrenched, they become politically very difficult to reverse. By contrast, programs that invest in children’s health and education and foster capital accumulation will ensure support for tomorrow’s elderly populations while sustaining economic growth that benefits everyone.
NTA BULLETIN 9
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National Transfer Accounts and Demographic Dividends
NTA Bulletin, No. 9, July 2016 revised
Demographic dividends are economic benefits that arise from changes in population age structure and from other demographic forces, enhancing opportunities for economic development. As falling fertility results in fewer dependent children relative to workers, a country experiences a first demographic dividend, with resources becoming available to increase investments and raise standards of living. The economic boost can be substantial, but it eventually comes to an end as the smaller population of children grows up to become a smaller population of workers while the number of elderly keeps growing.
Depending on the choices made by families and the policies pursued by governments, however, the first dividend can direct more resources into pro-growth investment, resulting in a second, more long-lasting, demographic dividend. NTA analysis over the past few years points to two important channels through which this occurs.
For one thing, changing demography can lead to higher rates of saving and investment. A working-age population facing a long period of retirement has a powerful incentive to accumulate assets. The second channel is through human-capital investment. Countries with low fertility invest more in the education and health of each child, and the improved skills and capabilities of each worker can more than compensate for the slower growth of the work force.
For the many countries currently experiencing a first demographic dividend, NTA can help understand how the benefits can be accelerated, prolonged, and directed toward important development goals. Other countries, which have completed the first dividend, can use NTA to understand how economic benefits can be sustained and how governments and families can best prepare for population aging.
NTA BULLETIN 8
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Population Change and Economic Growth in Asia: New Findings from the National Transfer Accounts (NTA) Project
NTA Bulletin, No. 8, November 2015
Population age structures are changing everywhere in the world, but nowhere has the change been more rapid or dramatic than in Asia. And changing age structures can have a profound effect on wellbeing and economic growth.
How many consumers and producers are there in a population? How much do they earn and how much do they consume at every stage of life? To what extent do the elderly support themselves from assets acquired during their working years? And how do families and governments meet the needs of children and the elderly who consume more than they produce?
The National Transfer Accounts (NTA) project is bringing together data and developing analytical tools to help answer these important questions. By providing estimates of income, public and private transfers, and consumption and saving by age, NTA adds an important dimension to measures of Gross Domestic Product (GDP) and other widely used economic indicators.
In 2014, the Asia Pacific Regional Office of the United Nations Population Fund (UNFPA APRO) and the East-West Center launched a project to expand and update NTA analysis in Bangladesh, Cambodia, China, India, Indonesia, Lao People’s Democratic Republic (PDR), the Philippines, Thailand, and Vietnam. Bangladesh and Malaysia joined the group later. The project includes national-level training, south-south exchange visits, NTA research-based policy briefs, and regional meetings showcasing best practices and progress in the NTA project, including comparisons with findings from other NTA member countries. This issue of the NTA Bulletin highlights early findings from this expansion of NTA analysis in the region.
NTA BULLETIN 7
Human-Resource Development and Demographic Change in China
NTA Bulletin, No. 7, October 2014
China’s economic success in recent decades can be traced in large part to the mobilization of the country’s enormous human-resource base. Improvements in the health and education of China’s huge working-age population have made a strong contribution to economic growth.
Looking ahead, as today’s large cohorts of workers grow older and transit into retirement, much smaller cohorts of children—born in an era of very low fertility—will be growing up and joining the workforce. Given a smaller number of workers, human-resource development that maximizes the potential of each individual will be even more central to China’s efforts to achieve broad social and economic development goals.
At this point, China is poised to address many of its human-resource challenges successfully. Public spending on education, and to a lesser extent on healthcare, appears to be commensurate with the current level of development. There is one important exception to this generalization, however—the disparity in spending on higher education. Although university enrollment tripled in the 10 years between 2000 and 2010, rural and lower-income young people still face clear disadvantages.
Improving economic security for the elderly is another challenge. Under China’s current, highly fragmented public pension scheme, pension programs for urban and formally employed citizens are relatively well established and generous, but rural residents and those employed in the informal sector do not have adequate access to public pension programs and, thus, remain highly vulnerable in their old age. Extending public pension programs to these groups will be challenging in the face of a slowly growing workforce and a swelling elderly population.
One policy change that would help address this challenge would be to raise the retirement age. As its population ages, China should be prepared to make better use of the productive potential of older people.
Overall, successful human-capital investment is essential for achieving sustainable economic growth and improving the wellbeing of all age groups.
NTA BULLETIN 6
Population Change and Economic Growth in Africa
NTA Bulletin, No. 6, August 2013
In June 2013, the United Nations (UN) released its latest set of biennial population projections, World Population Prospects. One of the most striking changes comes from Africa, where fertility estimates for many countries have been revised substantially upwards.
Apart from increasing the total number of people who must be supported on a limited resource base, high fertility has a strong distorting effect on population age structure. High-fertility populations are dominated by large numbers of dependent children, leaving few resources to boost current consumption or to save and invest for the future.
In this situation, rapid fertility decline can lead to an immediate acceleration of economic growth, which has been termed the “first demographic dividend.” Investment of the resources gained from this demographic jump-start can usher in a “second demographic dividend,” providing the basis for sustained economic development.
What does the future hold for Africa? In order to achieve a robust demographic dividend, policymakers in Africa’s high-fertility countries need to focus first and foremost on fertility decline.
The second policy priority is to increase investment in the health and education of children. All over the world, per capita investment in children has tended to increase as fertility goes down. It is important that African countries follow this path, both to assure the wellbeing of children today and to boost the productivity of the workforce tomorrow.
Investments in children do not achieve a maximum economic impact, however, unless they are accompanied by a robust job market. If young adults can find productive employment, they will be able to enjoy higher consumption, invest in their own children, and set money aside for the future. In exploring alternatives for economic development, policymakers need to emphasize job growth for young workers.
Finally, governments need to create an economic environment that helps working-age populations save and invest. Well-functioning financial markets, a strong banking system, secure property rights, a competitive economy, and financial literacy all play a role in assuring the economic security of all age groups.
NTA BULLETIN 5
Lower-Income Countries and the Demographic Dividend
NTA Bulletin, No. 5, December 2012
Over the past 60 years, population age structures have been changing everywhere in the world. As the share of national populations at working ages has grown relative to the share of dependent children, many of the world’s fastest-growing economies have enjoyed a substantial demographic dividend that has helped accelerate economic growth. Lower-income countries are at the early stages of this demographic transition. Important work lies ahead if they are to take full advantage of a changing age structure to accelerate economic growth. The timing and magnitude of each country’s demographic dividend depend on demographic and economic factors and the policies that influence them. This issue of the NTA Bulletin explores whether lower-income countries can experience a first demographic dividend—a significant boost to their economic growth as the share of the population in the working ages increases. Equally important is whether the resources freed up by the first dividend can support investment in human and physical capital that leads to a second dividend.
NTA BULLETIN 4
How Well Do Societies Meet the Consumption Needs of All Age Groups?
NTA Bulletin, No. 4, June 2012
A steady, adequate level of consumption is a critical measure of wellbeing at every stage of life. Working-age adults support their consumption largely through labor income. But an important concern for families and policymakers alike is to support the education, healthcare, and other consumption needs of children and the elderly, who generally earn little income of their own.
Until recently, little has been known about consumption patterns among specific age groups or how these might be affected as population age structures change over time. But now the National Transfer Accounts (NTA) project is bringing together and analyzing information on private and public consumption at every age, covering economies at widely varying stages of economic development.
In general, NTA findings show that societies meet the consumption needs of broad population age groups--children, working-age adults, and the elderly--fairly equitably. This general pattern holds whether societies are rich or poor and whether people rely largely on families, governments, or financial markets to support their consumption. There are some interesting variations, however. The consumption of children is lowest, relative to the consumption of working-age adults, in poor, high-fertility societies. As low fertility results in smaller numbers of children, governments and families alike have an opportunity to invest more in each child's health and education. NTA findings show that some economies are meeting this challenge better than others.
In some, but not all, high-income economies, consumption rises very steeply among the oldest age groups, while in middle- and low-income economies, consumption tend to be flat throughout old age. High per capita consumption by the elderly poses two important policy questions. First, are current consumption patterns based on the values of a society, or do they reflect waste and inefficiency, particularly within healthcare systems? And second, will current high consumption costs be sustainable as elderly populations expand?
NTA BULLETIN 3
The Economic Consequences of Population Aging: Report on a Technical Policy Seminar
NTA Bulletin, No. 3, 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.
NTA BULLETIN 2
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Transferring Resources Between Age Groups: What Roles Do Governments Play?
NTA Bulletin, No. 2, May 2011
Over the past 100 years, most governments have steadily expanded social programs that provide cash and services to children and the elderly. These programs are funded by taxes paid largely by the working-age population. Thus changes in the relative size of the three age groups—children, working-age adults, and the elderly—have a significant impact on the size of government programs and on the resources available to pay for them.
The National Transfer Accounts (NTA) project helps shed light on government opportunities and challenges by providing estimates and forecasts of taxes that will be paid and public benefits that will be received by all age groups given current tax and benefit policies. In this way, NTA estimates the size of the fiscal adjustment that countries will need to make in the future in response to changes in population age structure.
In fact, the age profile of public benefits is likely to shift over time—for example, with increased investment in education for children and increased investment in healthcare for the elderly. Pension reforms may also shift some of the burden of population aging away from public programs toward family resources and the use of saving and investment income. NTA data can be combined with these alternative policy scenarios to produce medium- and long-term fiscal forecasts.
NTA BULLETIN 1
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The Spanish edition of Bulletin 1 is now available:
National Transfer Accounts: A New Way to Look at Population Change and Economic Growth
NTA Bulletin, No. 1, January 2011
In all modern societies, children and the elderly consume more resources than they produce through their labor, while working-age adults produce more than they consume. What makes this economic lifecycle possible is the flow of resources over time and across generations through a complex of social, economic, and political institutions.
The National Transfer Accounts (NTA) project provides estimates of labor income, consumption, saving, and the flow or resources among age groups, revealing striking similarities and differences between countries. In both Brazil and Mexico, for example, families provide most of the consumption needs of children. But the elderly in Brazil receive large public pensions, supporting a steep rise in consumption during old age, while the elderly in Mexico work longer and support themselves largely through asset income. Their consumption declines in old age.
Changes in population age structure pose special challenges for policymakers. As fertility decline results in fewer children, will families and governments use their resources to improve education and healthcare for each child? As working-age populations expand relative to other age groups, will the public and private sectors keep pace with expanding opportunities for productive employment? And as elderly populations increase, will public pension and healthcare programs be sustainable? NTA provides data and analysis on more than 30 economies to help answer these important questions.
We hope that you will find this policy brief useful. You may order printed copies by sending an e-mail to email@example.com. We look forward to hearing from you and welcome your feedback on this first issue of the NTA Bulletin.