Transcript Diapositiva 1 - National Transfer Accounts

Measuring the degree of government intervention
on intergenerational family transfers (IFT)
using NTA estimates
Concepció Patxot
Elisenda Renteria
Miguel Sánchez Romero
Guadalupe Souto
A proposal to the Incentives Working Group (IWG)
1. Integrated results for GA and NTA for Spain: some implications for the
sustainability of welfare state (paper finished for Spain)
2. Measuring the degree of government intervention on intergenerational
family transfers (IFT) using NTA estimates (paper almost finished for
Spain)
3. A proposal of a comparative paper on indicators
Concepció Patxot
Elisenda Renteria
Miguel Sánchez Romero
Guadalupe Souto
General motivación
• Ageing threats the sustainability of one of the Welfare State –one of greatest
social achievements of the past century.
• Effects of population ageing on the economy
– L scarce
– K relatively abundat
¿ ↑ k=K/L?
¿↑w↓r
Effects depend on:
– Preferences on savings: retirement/bequest/precaution motive + intergenerational transfers
– Other endogenous variables: Even fertility!
• Effects on budget depend on:
– Increase in demographic dependency and…
– Increase in ratio benefit receivers/tax payers (wage us the tax base, so…)
– NTA/GA allows to obtain some helpful indicators (Stiglitz commission)
• What happens to the rest of age reallocations?! It matters for
intra/intergenerational redistribution and there is no an integrated
theoretical model accounting for all the transfers.
– We can measure the degree of intervention to both sides
Measuring the degree of government intervention on
intergenerational family transfers (IFT) using NTA estimates
• Why is ageing a problem for the welfare state?:.. Besides the traditional
constraints on public policy
• Tax schedules that are as neutral as possible
• A new difficulty emerges: most of the social programs (pensions, health
care, education, etc.)
– Entail not only intra but intergenerational redistribution
– It implies intertemporal movement of public funds, usually financed –
either explicitly or implicitly – on a pay-as-you-go basis (PAYG).
– Most outstanding example: Pension system (explicit PAYG), but also
health, etc.
– The “transition problem”: The initial gift must be born by the current
active who should raise a new fund so they bear 2 burdens (a third
one: child rearing!!!)
• A deeper question: Why should de government interfere in the forward or
backward intergenerational transfers (from parents to their offspring or
vice versa).
Transfers
Money, time and time
&effort
Types
Motives
Substitution from
Market or
Government?
Reasons for public
intervention (+/-)
To young dependents
Birth (IF)
Subsistence (IF)
Health Care, personal
relations
Education (IF)
Bequests (EF)
Gifts
Altruism (Fwd)/
Social contract
Exchange
Liquidity constraints
prevent market
substitution!
+ Redistribution, equal
opportunities,
intergenerational mobility
Health care scarcely
substitutable
+ External positive effects
on growth (and liquidity
constraints)
- External effect on fertility
(not on saving plans)
- PAYG finance subject to
demographic risk
Need to consider
bargaining between
parents (marriage)…
Old dependents
Subsistence
Health care, personal
relations
Gifts
Altruism (Bkw)
Social contract
Exchange
In general more
substitutable than to
young
Redistribution
Myopia
Uninsurable risk (Long term
care)
Demonstration effect
as a reinforcing device
on social contract??
Issues
Social changes
occurred
• Affecting lifecycle timing: Increase in life expectancy and delay in entry in the labor market due to
education . A reduction on the productive/dependent period?
• Female participating : Reduces the availability of non market work
Effects on capital
accumulation
• Private transfers might be “fully funded” (except if myopia) or human capital funded (if invested on
education of the young)
Motivation
• A deeper question: Why should de government interfere in
the forward or backward intergenerational transfers (from
parents to their offspring or vice versa).
• A too complex issue to model, but we can do something using
NTA estimates:
– Measure the degree of intervention in both sides (paper
for Spain)
• Comparative analysis (general paper)
– Measure the first and second demographic dividend
(Mason & Lee 2006)
– A more transparent way of measuring the room left for the
second DD: A sinthetic indicator (general paper)
Measuring the degree of government intervention on IFT
“Modified” Lee Arrows
LCD from 41,31
13,14
122.85%
11,48
73,65
140.20%
74,99
TG from 41,74
156.33%
78.31%
TF from 43.43
14,29
101.33%
62.33
19.78%
TF from 74.94
29.10%
Measuring the degree of government intervention on IFT: “Modified” Lee Arrows
Transfers
Expenditure to GDP(%)
2.004
2.050
Education
4,41
4,21
Family
0,5
0,47
Health (to the young)
0,71
0,69
Total forward looking
5,60
5,37
Backward looking (from adult children to parents)
2.004
2.050
Retirement pensions
6,02
13,54
Long term care
0,33
0,97
Health (to the elderly)
4,58
7,81
Total backward looking
12,16
22,32
Forward looking (from parents to kids)
Source: Ferrer and Patxot (2007)
(Back to the effects on budget) The Spaish demography
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
YDR 0-15 / 16-64
ODR 65+ / 16-64
Total DR
2150
2140
2130
2120
2110
2100
2090
2080
2070
2060
2050
2040
2030
2020
2010
2000
1990
1980
1970
1960
1950
1940
1930
1920
1910
1900
0.00%
NTA and GA an integrated view
Standard NTA: Baseyear Cross Section
LCDt  ABRt  TGt  TFt
LCDt
ABRt
Economic
Variables
Fist DD
Backard looking
TFt
TGt
Demographic
Variables:
Population (P)
GA: forward looking
Sustainability of TG
Pt e
Baseyear, t
GA
newborn
GA
Future
Time
GA/NTA indicators
• Tipical GA sustainability indicator
– PV future net deficits/PV future GDP
– = “Intertemporal” Debt/ “Intertemporal” GDP
– Evolution of Budget balance/GDP
• NTA indicators: Base year and changing population
– “Economic” Support Ratio (ESR)
• L/C (weighted by NTA profiles)
•
• Another option: LCD/LCS = Aggregate - LCD/aggregate + LCD (LCS)
– Evolution of financing sources of LCD
TG
TF
ABR
1


– Sustainability Indicators (more GA)
LCD LCD LCD
ABR/Yl needed an interesting “Residual”
LCD TG TF ABR



Y
Y
Y
Yl
Issues
l
l
l
– 3-4 “economic sustainability” indicators
– (NTA) TG is “zero” in a closed economy , but still: its evolution is interesting
– General equilibrium AND wealth account missing
Figure 6 Evolution of the share of TG, TF and ABR in LCD (1908-2150)
250%
200%
150%
100%
50%
-50%
1908
1917
1926
1935
1944
1953
1962
1971
1980
1989
1998
2007
2016
2025
2034
2043
2052
2061
2070
2079
2088
2097
2106
2115
2124
2133
2142
0%
-100%
TG/LCD
TF/LCD
ABR/LCD
Figure 7 Evolution of economic sustainability indicators for Spain (1908-2150)
0,6
0,5
0,4
0,3
0,2
0,1
-0,1
1908
1917
1926
1935
1944
1953
1962
1971
1980
1989
1998
2007
2016
2025
2034
2043
2052
2061
2070
2079
2088
2097
2106
2115
2124
2133
2142
0
-0,2
TG/Yl
TF/Yl
ABR/Yl
LCD/Yl
1908
1917
1926
1935
1944
1953
1962
1971
1980
1989
1998
2007
2016
2025
2034
2043
2052
2061
2070
2079
2088
2097
2106
2115
2124
2133
2142
Figure 8 Evolution of the ABR aggregates (1908-2150)
0,6
0,5
0,4
0,3
0,2
0,1
0
ABR/Yl
Ya/Yl
S/Yl
LCD/Yl
Discussion
A comprative paper exploring the romm left for the second demographic
dividend
• Sustainability ABR/Yl
• Balance: “Modified” Lee Arrows
• Explicit funding and implicit or pre “funding” : (More modified rows)
Where about in the demographic transition?
• Best/worst moment?
Thank you
Spain
1. Introduction
2. Theoretical framework/motivation/// An incursion to/a selective turn
across the // Some hints on the//Lit on IIT (an incursion....)
2 BIS. GA and NTA Methodology AND ITS REALTION TO GA: Similarities and
disparities.
4. Results
• 4.1. Basic NTA results for Spain in 2000
• 4.2. Measuring the government intervention on IFT
– 4.2.1. Balance indicators using NTA profiles
– 4.2.2. Balance indicators in the GA tradition
– Singles versus households NTA
5. Concluding remarks
(to be written)
Comparative
1. Introduction
2. Theoretical framework/motivation/// An incursion to/a selective turn
across the // Some hints on the//Lit on IIT (an incursion....)
Tabla...
2 BIS. GA and NTA Methodology AND ITS REALTION TO GA: Similarities and
disparities.
4. Results
• 4.1. Basic NTA results for Spain in 2000
• 4.2. Measuring the government intervention on IFT
– 4.2.1. Balance indicators using NTA profiles
– 4.2.2. Balance indicators in the GA tradition
– Singles versus households NTA
5. Concluding remarks
(to be written)