May 2010

Welcome to the second issue of the NTA Newsletter!

All newsletters are also available on the NTA website, by clicking on the Publications link in the left menu.

Your input is needed to keep this newsletter interesting and relevant. Please don't hesitate to email your ideas to the managing editor (Melinda Podor). We especially look forward to hearing about upcoming events, new papers, NTA in the news, and any photos you'd like to share.

The Honolulu NTA workshop and conference will be taking place from June 6 to June 19. We look forward to seeing you at these events. For more information about the workshop and conference, see upcoming events.

Please note that this is an html email with images - you may need to adjust your email settings to view it in its intended form, or view it in your browser.

Melinda

Upcoming Events

Workshop on Population Aging and the Generational Economy
Honolulu, USA, June 6-19, 2010
East West Center

The NTA workshop will be held in conjunction with the 41st East-West Center Summer Seminar on Population, in Honolulu, USA, from June 6th to 19th, 2010. Workshop participants will take part in one of two groups:

A) The "NTA Fundamentals" group, for those who are relatively new to the NTA project and/or those who want to become more familiar with the research methodology. Lectures will be presented in the morning and hands-on work in the afternoon. The focus will be on constructing NTA for one year during the workshop; and

B) The "NTA Research" group, for researchers who are already familiar with the methodology, and want to discuss issues beyond the construction of accounts. This group will participate in several working groups. These are the following:

- Generational Accounts (Young Chun)
- Sandwich generations (Tim Miller)
- Bequests and other capital transfers (Luis Rosero Bixby)
- Balance sheets, wealth account (Andrew Mason)
- Simulation models (Miguel Sánchez-Romero)
- Population sub-groups (income, education, gender, etc.) (Cassio Turra, Mauricio Holz)
- Generational Indicators (Róbert Gál)
- Gender, Time use (Gretchen Donehower)
Click here to find more information about the workshop, agenda, and sign up for one or more of working groups for Track B team.

If you are planning to participate in the upcoming NTA workshop, you should have received several emails already, detailing workshop plans and what data to bring with you. If you have any questions, please contact Marjorie or Gretchen about micro and macro data, and Turro about agenda items.



NTA Conference on Population and the Generational Economy
Honolulu, USA, June 11-12, 2010
East West Center

Countries around the world are experiencing enormous changes in their age structures that are affecting economic growth and security, generational equity, and the sustainability of important government programs that fund education, health care, long-term care, and pensions. Researchers and policymakers from over thirty countries in Asia, Latin America, Europe, Africa and the United States will present recent research and discuss the implications for public policy.
Coordinators: Andrew Mason and Ronald Lee.

Click here for more information

What’s New

ECLAC/IDRC Grant - Phase II
(Intergenerational Transfers, Population Aging, and Social Protection in Latin America.)

Phase I results stressed the impact of demographic change on economies through the increasing proportion of the population in the working-ages and the potential increase in savings in preparation for retirement; estimated the likely impact of demographic change on government budgets (on education, health, and pensions); and provided a picture of how governments, families, and individuals support each other throughout the life cycle.

The general objective of the project is to improve the fiscal sustainability and equity of social protection systems in Latin America in the face of population aging.
Specific, operational objectives are:
1. To strengthen the capacities of participant national centers to develop, implement, and use NTA methods. In Phase II, three new innovations in the NTA system will be implemented:
(a) measuring family bequests;
(b) extending the NTA framework to measure differences in economic activity and well-being by socioeconomic status (either education or income quintile) and age; and
(c) developing future demographic and economic scenarios based on NTA data.
2. To better inform social protection policy decisions by an analysis of the impact of population aging on economic growth, fiscal sustainability, and equity.
3. To better inform policymakers on the importance of long-run transformations brought about by population aging.
4. To foster cross country comparison, collaborations, and regional perspectives.

Participating countries: Brazil, Chile, Costa Rica, Mexico, Uruguay
Newly entering countries: Argentina, Colombia & Jamaica

New publications that will result from this project:
A technical report on NTA estimates of public transfers by age and socioeconomic status.
A policy brief to inform national policy debate using NTA data.
A technical report on NTA estimates by age and socioeconomic status for 2 years, at least a decade apart.
A report on alternative futures for the year 2040.

The ECLAC (Economic Commission for Latin America and the Caribbean) will serve as the leading institution, assuming responsibility for the general coordination of the project, disbursement of funds to the participating centers, and the project administration, including substantive and financial reporting.


NTA Receives a Grant from IDRC to Improve Communications Activities

The National Transfer Account project has received a two-year grant from the International Development Research Center (IDRC) of Canada. The grant will help to increase understanding of generational issues among policy makers and the media, build the identity and credibility of the NTA network, and to improve communication among research teams within the network. It will also support NTA members' participation in the workshops and conferences taking place in Honolulu.

Improving the NTA project’s communication strategy is particularly important for two reasons. Rapid growth in the NTA network requires a more systematic and effective approach to communication. Second, the important new research findings that the project is starting to provide need to be communicated to the appropriate policy audiences. Print and electronic publications will be designed to compete for the time and attention of busy policymakers. In addition, capable and influential researchers within the network will be encouraged to develop ties with policymakers and to participate in policy seminars at the national and international level.

The new communication component will support the writing, design, production, and distribution of policy briefs, the web-based dissemination of results through an enhanced NTA website, the development of improved charts and graphs, and other elements of an effective communication strategy. The project will also emphasize communication infrastructure to support regional and national NTA groups and enhanced communication by all project members.

Design work will be the responsibility of a professional design firm to be selected through a competitive process. Writing and editing will be the primary responsibility of Sidney Westley, Communications Specialist at the East-West Center, in consultation with NTA researchers.

Recent events summary

African NTA Workshop
Development Policy Research Unit at the University of Cape Town
Cape Town, South Africa, April 28 - May 1, 2010
Protea Hotel Victoria Junction

NTA researchers from five African countries (Kenya, Mozambique, Nigeria, Senegal and South Africa) participated in the African NTA workshop, which is hosted by the Development Policy Research Unit, School of Economics, University of Cape Town. The main objective of the workshop was to complete the construction of NT Flow Accounts. Drs. Cassio Turra (CEDEPLAR) and Amonthep Chawla (TDRI) served as resource persons.
Click here for further information and preliminary results.

Recent papers

Fertility, Human Capital, and Economic Growth over the Demographic Transition
Ronald Lee and Andrew Mason, European Journal of Population
Read abstract Access paper online

Who Wins and Who Loses? Public Transfer Accounts for US Generations Born 1850 to 2090.
Antoine Bommier, Ronald Lee, Tim Miller, and Stephane Zuber. Population and Development Review (2010).
Read abstract Access paper online

Access all NTA working papers online
Access published NTA papers online

We welcome our newest member

Sidney B. Westley
Communications Specialist, Research Program
Honolulu, United States
email: westleys@eastwestcenter.org

Ms. Westley has worked as a writer, editor, and publications director for more than 30 years, including 22 years in East Africa. Before joining the East-West Center in 1994, she worked for research organizations in the fields of forestry and agroforestry, immunology and molecular biology, animal science, development, and African history. At the East-West Center, she works on a variety of publication projects, primarily in areas of population and reproductive health. In June every year, Ms. Westley coordinates a workshop on Communicating with Policymakers about Population and Health as part of the East-West Center's Summer Seminar on Population.

Focus on... South Africa

Photo: The University of Cape Town

South Africa is a recent addition to the NTA family, having joined at the beginning of 2009. It is part of the five-country African project, funded by IDRC, along with Kenya, Mozambique, Nigeria and Senegal, and have benefited from training in Mombasa, Kenya, and Cape Town, South Africa.

To date, the South Africa team has estimated the lifecycle deficit for 2005 and the first demographic dividend, and have begun work on public transfers. Some of the key socioeconomic features currently characteristic of South Africa are reflected in the various profiles already calculated. The high rate of unemployment, particularly amongst young people, is evidenced in the relatively slow rise of the labour income profile, while the relatively strong social pension system, which begins paying out pensions at age 60 for women and 65 for men, sees a steep decline in labour income from around age 58.

Given South Africa’s history and persistent race-based inequalities – South Africa has one of the highest Gini coefficients in the world, currently estimated at around 0.7 – one of the issues that the team would like to explore in the future is that of race. For example, there are strong race-based patterns in terms of utilisation of public health services, while the government has implemented a progressive system of subsidies for public education. So, it is possible to allocate elements of government expenditure along racial lines, while the same is true of tax revenues.

Photo: Cape Town Stadium with Table Mountain in the background




The South African team consists of Morné Oosthuizen and Toughedah Jacobs, both of whom are based at the Development Policy Research Unit (DPRU) in the School of Economics at the University of Cape Town. The DPRU’s primary focus is on policy-relevant research in the fields of labour markets, poverty and inequality. More details and published research are available at www.dpru.uct.ac.za.

Methodology Refresher

Aggregate Controls

The aggregate control variables in the NT Flow Account are drawn from the National Income and Product Accounts (NIPA) so that the NTA is consistent with NIPA. Please note that the aggregate controls should be consistent not only between NTA and NIPA, but also within all spreadsheets being generated such as “RA spreadsheet” and “Macro Control” spreadsheet in NTA. Also make sure that the aggregate controls for “Lifecycle Deficit” are consistent with aggregate controls of “Age Reallocations”. Here is an example of consistent spreadsheet which shows seven steps of deriving aggregate controls using NIPA: Spain macro controls spreadsheet

For more information, please see the NTA methodology v.2, Section 2.1. Aggregate Controls.

Other Items of Interest

UN Population Division Report
The United Nations Population Division has released a new report on "World Population Ageing 2009" , with up-to-date information and assessment of trends in demographic ageing in all major regions of the world, including new information on the urban-rural differences in ageing by development regions and a section on the impact of the current financial and economic crisis on the older population.

Summary findings: The world population continues to age at a rapid rate. In 2009, the number of persons aged 60 or over has surpassed 700 million, and this number is projected to triple by 2050, to reach more than 2 billion. The world’s older population, currently growing at 2.6 per cent per year, will continue to expand faster than the population in other age groups at least until 2050. Although the populations of both the more developed and the less developed regions will continue to age, most of the absolute increase in the number of older persons will take place in the urban areas of the less developed countries. The financial and economic crisis has had large negative effects on pension funds and on the rate of return of those assets, but has also impacted the working age population and especially workers and older persons without social security coverage in developing countries. These trends have important consequences for intergenerational relations, for dependency ratios, the sustainability of social security systems and economic support of the present and future generations of older persons. The hardcopy report, which will also include individual country profiles on ageing and related demographic, social and labour market indicators, will be published in the first semester of 2010.

The Population Division published a new Wall Chart on Ageing and Development 2009, with updated demographic, socioeconomic and labour force participation indicators referred to the older population, and summary information on new urban-rural differences in ageing. Among other indicators, the wall chart contains up-to-date information on the number and proportion of the population aged 60 or over, aged 80 or over, life expectancy at age 60, the percentage currently married, living alone and in the labour force among those aged 60 or over, the old-age support ratio, and the statutory retirement age in 230 countries in the world. The wall chart is also available in an Excel file with the data, for users interested in doing data/statistical analysis.

Paper Abstracts

Fertility, Human Capital, and Economic Growth over the Demographic Transition
Ronald Lee and Andrew Mason, European Journal of Population

Abstract: Do low fertility and population aging lead to economic decline if couples have fewer children, but invest more in each child? By addressing this question, this article extends previous work in which the authors show that population aging leads to an increased demand for wealth that can, under some conditions, lead to increased capital per worker and higher per capita consumption. This article is based on an overlapping generations (OLG) model which highlights the quantity–quality tradeoff and the links between human capital investment and economic growth. It incorporates new national level estimates of human capital investment produced by the National Transfer Accounts project. Simulation analysis is employed to show that, even in the absence of the capital dilution effect, low fertility leads to higher per capita consumption through human capital accumulation, given plausible model parameters. Access paper online

Back to working papers

Who Wins and Who Loses? Public Transfer Accounts for US Generations Born 1850 to 2090.
Antoine Bommier, Ronald Lee, Tim Miller, and Stephane Zuber. Population and Development Review (2010).

Abstract: Public transfer programs in industrial nations are thought to benefit the elderly through pension and health care programs at the expense of the young and future generations. However, this intergenerational picture changes if public education is also considered as a transfer program. We calculate the net present value (NPV) of benefits received minus taxes paid for US generations born 1850 to 2090. Surprisingly, all generations 1950 to 2050 are net gainers, while many current elderly are losers. Windfall gains from starting Social Security and Medicare partially offset windfall losses from starting public education, roughly consistent with the Becker-Murphy theory. Access paper online

Back to working papers