National Transfer Accounts: Concepts and results for Chile

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National Transfer Accounts Concepts and results
for Chile

• Jorge Bravo, U.N. Population Division
• Mauricio Holz, ECLAC/CELADE
• Presentation at the Expert Group Meeting on Age
  Structural Transitions, Vienna, Austria, 7-9
  October 2008

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NTA Concepts

• NTAs measure, at the aggregate level,
  reallocations of economic resources across
  persons of different ages
• The framework considers the various ways and
  mechanisms through which the life cycle deficit
  (LCD) is financed over the lifecycle

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The reallocation framework
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NTA significance

• Provides comprehensive framework to study, among
  other
• intergenerational reallocation of resources
  across countries and over time
• generational equity of public and private
  transfer systems, and to better analyze policy
  options
• population and economic growth, including
  demographic dividends
• life-cycle saving behavior

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NTA project funding and participants

• Funding by NIA, MacArthur Foundation, UNFPA,
  IDRC, and participating centers
• Leaders are Ronald Lee, University of California,
  Berkeley, and Andrew Mason, East-West Center,
  Honolulu
• Centers and Researchers in

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NTA project

• 25 countries (October 2008)

Project website http//www.ntaccounts.org/
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Summary NTA equation
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Results for Chile, 1987-97
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Figure 4. Impact of cash transfers on rates
poverty by age group, Chile 1998
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Source ECLAC (2007) Social Panorama 2007
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Source ECLAC (2007) Social Panorama 2007
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Source ECLAC (2007) Social Panorama 2007
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Source ECLAC (2007) Social Panorama 2007
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Changes in LCD 1987-1997

• Significant increase in consumption levels,
  including education expenditures
• Large age shift in labor income, reflecting
  longer education span and postponement of
  retirement
• Longer tax-paying lifespan and greater
  accumulation of assets

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Public and private education

• Education policies during the 1980s aimed at
  improving efficiency, included decentralization,
  introduction of vouchers, and expansion of
  private universities. During the 1990s and 2000
  policies have increased equity, targeting
  lower-income families in all education levels
• Per-capita expenditures in education increased
  substantially 50 (56 public, 40 private), and
  coverage has risen, but there remains much room
  for improvement

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Conclusions

• The Chilean labor income and consumption age
  profiles, net producer and net taxpayer
  life-spans are close to the average of Latin
  American countries
• The fairly extensive coverage of education,
  health, and social security public programs
  transfer substantial resources, especially to
  children and the elderly

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Conclusions (cont.)

• Cash transfers (1/3 of all public transfers) are
  mostly pensions that benefit mainly the elderly,
  and represent by far the largest per-capita
  government transfer program. It will continue to
  expand in the public budget because of recent
  reforms and population ageing, but
• children and youth, as a group, receive as much
  in public benefits than the elderly. 2/3 of all
  transfers are in-kind, which are targeted to
  children and adults of all ages, and are much
  more progressive in their distributive incidence

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Conclusions (cont.)

• All adults make and receive private transfers,
  but in the net, they are important as a source of
  finance of consumption only for children
• Adults rely heavily on their own labor income and
  asset reallocations (more than 2/5 of their
  consumption), a source that will probably
  continue to increase in the future
• Public education expenditures have increased
  substantially and equity in the system has
  improved, but much progress can still be made in
  reducing socioeconomic gaps in attendance and the
  quality of education if the demographic dividend
  is to be taken advantage of.