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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. NTA Concepts. - PowerPoint PPT Presentation
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National Transfer Accounts: Concepts and results for Chile
Jorge Bravo, U.N. Population DivisionMauricio Holz, ECLAC/CELADE
Presentation at the Expert Group Meeting on Age Structural Transitions, Vienna, Austria, 7-
9 October 2008
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:
The reallocation framework
NTA significance
Provides comprehensive framework to study, among other:
a) intergenerational reallocation of resources across countries and over time;
b) generational equity of public and private transfer systems, and to better analyze policy options;
c) population and economic growth, including demographic dividends;
d) life-cycle saving behavior
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: …
NTA project• 25 countries (October 2008)
Project website: http://www.ntaccounts.org/
Summary NTA equation
Lifecycle deficit Asset-based reallocations Net public transfers Net private transfers
Net transfers
Age reallocations
l A g g f fC Y Y S
Results for Chile, 1987-97
Figure 1. Life Cycle Deficit, Chile 1997
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90Age
Pes
os
Labor Income
Self-Employed Income
Private Consumption
Public Consumption
Total Consumption
Figure 2. Per-Capita in kind Transfers, Chile 1997
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Age
Pes
os
Education
Health
Others
Total Public Consumption
Figure 3. Per-capita Public Inflows, Chile 1997
-
200
400
600
800
1,000
1,200
1,400
1,600
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Th
ou
san
d p
eso
s
Cash
In-kind
Total
Figure 4. Impact of cash transfers on rates poverty by age group, Chile 1998
Chile 1998
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0-9 10--19 20-29 30-39 40-49 50-59 60-69 70-79 80-89 90-99 Age
Source: CASEN 1998
%
Excluding in cash public transfers
Including in cash public transfers
Source: ECLAC (2007) Social Panorama 2007
Source: ECLAC (2007) Social Panorama 2007
Source: ECLAC (2007) Social Panorama 2007
Source: ECLAC (2007) Social Panorama 2007
Figure 5. Per-capita Public Outflows, Chile 1997
0
100
200
300
400
500
600
700
800
0 10 20 30 40 50 60 70 80 90
Th
ou
san
ds
Value Added Taxes
Taxes On Production
Indirect Taxes
Direct Taxes
Social Contributions
Other Taxes
Total Taxes
Figure 6. Net (aggregate) public transfers, Chile 1997
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
Mill
ions
Age
Figure 7. Per-Capita private transfers,Chile 1997
(2,000,000)
(1,500,000)
(1,000,000)
(500,000)
-
500,000
1,000,000
1,500,000
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Age
Pe
sos
Private transfers inflows
Private transfers outflows
Net private transfers
Figure 8. Asset Reallocation, Chile 1997
-500,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Age
Pes
os
Asset-Based Reallocations
Asset Income
Saving
Figure 9. Finance of Consumption, Chile 1997
20%51%
21%13%
-22%
25%53%
59%
-44%
-20% -4%
7%
39%
44% 30%
127%
-100%
-50%
0%
50%
100%
150%
200%
0-25 26-54 55+ 65+
Age
Asset BasedReallocations
Net Private Transfers
Net Public Transfers
Labor Income
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
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
Consumption in Education, Chile 1987-1997 (relative to average labor income 30-49)
-0.02
0
0.02
0.04
0.06
0.08
0.1
0.12
0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90
Age
Private Education 1997
Private Education 1987
Public Education 1997
Public Education 1987
School Attendance Rates, Chile 1987-2006
0%
20%
40%
60%
80%
100%
0 5 10 15 20 25
Age
Rates of Attendance 1987
Rates of Attendance 1997
Rates of Attendance 2006
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;
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;
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.
