2.1 Aggregate Controls
Consumption, aggregated across all ages is the total value of final goods and services consumed in one calendar (or fiscal) year by a country’s residents. Likewise, labor income, aggregated across all ages, is equal to an estimate of the total value of production attributable to the labor of a country’s residents. These values are based on National Income and Product Accounts as are many of the components in NTA. The aggregate estimated age profiles in and the per capita age profile are estimated from individual/household surveys and administrative records. The age profiles are adjusted proportionately to match aggregate totals reported in NIPA or in some cases estimated using NIPA.
To be explicit about the procedure, let x(a) be the per capita age profile, N(a) the population, X the aggregate control value. The per capita profiles are adjusted using a factor θ :
Then, the final per capita profile and aggregate profile are given, respectively, by:
The aggregate control variables in the NT Flow Account are in general consistent with the National Income and Product Accounts (NIPA), based primarily on the United Nations 1993 System of National Accounts (UN 1993 SNA). The application of NTA in any particular case may deviate because national accounts in some countries follow the 1968 version of SNA or may differ in other ways from the UN guidelines. Another important source of information is the IMF Government Financial Statistics (GFS). Section Using Government Financial Statistics to Construct NTA discusses the use of GFS to construct public sector account in NTA. Detailed information on UN 1993 SNA is provided in http://unstats.un.org/unsd/sna1993/introduction.asp
Consumption Aggregate Controls
The macro controls for consumption are based on Final Uses in GDP. With adjustments described below total NTA consumption is equal to “Final consumption expenditure”, public consumption is equal to “General government final consumption expenditure,” and private consumption is equal to “Household final consumption expenditure” plus “NPISHs’ final consumption expenditure.”
The aggregate control for private consumption of health and education are taken from the classification of private consumption by purpose. All other private final consumption expenditure is combined to serve as the macro control for the NTA variable Other Consumption.
The macro control for public consumption of health, education, and other public consumption are similarly based on the classification of public consumption by purpose.
The following adjustments are required for consumption macro controls.
Reclassification of private health consumption. Private health consumption for which households receive reimbursement from national health insurance programs or other public health programs are reclassified as public health consumption.
Consumer durables. In UN 1993 SNA the consumption of owner-occupied housing is measured as the value of the flow of services. Other consumer durable consumption is measured by expenditure. If a flow of services approach is adopted, other private consumption must be adjusted by adding the value of the flow of services and subtracting expenditure on non-housing consumer durables.
Indirect taxes. Indirect taxes, called “Taxes on Production” under the Standard of National Accounts (SNA) 1993, consist of taxes on products payable on goods and services when they are produced, delivered, sold or transferred, plus taxes on the ownership or use of land, buildings or other assets used in production or on the labor. In NTA, consumption is measured as pre-tax consumption, and hence, of indirect taxes on consumption should be subtracted from consumption. Public Reallocations section discusses taxes and their incidence in more detail.
Labor Income Macro Controls
Total labor income is estimated from NIPA. Using the terminology of the 1993 UN System of National Accounts, labor income consists of three components: compensation of employees, labor's share of mixed income, and labor's share of taxes on net production and on imports (known as indirect taxes) less business subsidies.
The compensation of employees consists of wages and salaries and employers’ social contributions, including labor income of residents who are working abroad.
Some of the non-resident remittances are in fact compensation. Individual country teams have to decide what would be the most relevant method for their country. For example, for the Philippines, where majority of workers abroad are guest workers, a substantial portion of remittances from ROW is added to the labor income macro controls.
Labor’s share of mixed income is not reported in NIPA and must be estimated. In the absence of information to the contrary, we assume that two-thirds of the household mixed income is labor income. This approach is consistent with the best available information. Warning: in some countries, the aggregate control mixed income includes the operating surplus (imputed rent) of households. In this instance the operating surplus of households should be subtracted from mixed income before labor’s share is estimated.
The following adjustments are required for labor income macro controls.
Indirect taxes. Some taxes on production and on imports are borne by workers in the form of reduced compensation, by owners of assets in the form of reduced asset income, and by consumers in the form of higher prices. In NTA, the labor income is measured as pre-tax labor income. Hence, total labor income should be increased by net taxes on labor, i.e., an estimate of the share of taxes on production and on imports less subsidies borne by labor. See the Public Reallocations section for the incidence of indirect taxes.
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