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National Transfer Accounts: Concepts and results for Chile

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.

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National Transfer Accounts: Concepts and results for Chile

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  1. 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

  2. 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:

  3. The reallocation framework

  4. 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

  5. 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: …

  6. NTA project • 25 countries (October 2008) Project website: http://www.ntaccounts.org/

  7. Summary NTA equation

  8. Results for Chile, 1987-97

  9. Figure 4. Impact of cash transfers on rates poverty by age group, Chile 1998

  10. Source: ECLAC (2007) Social Panorama 2007

  11. Source: ECLAC (2007) Social Panorama 2007

  12. Source: ECLAC (2007) Social Panorama 2007

  13. Source: ECLAC (2007) Social Panorama 2007

  14. 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

  15. 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

  16. 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;

  17. 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;

  18. 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.

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