NTA2020 Lai_b

Global Meeting on Population and the Generational Economy, August 2020

Presentation: Nicole Lai, Tim Miller, NTAs for the 90%

Abstract

"This paper presents new estimates on the sources of economic support for non-rich children and older persons in NTA countries. By “non-rich” we mean the poorest 90% of the population in each country. The richest 10% in each country are excluded from the analysis. This dramatically alters the kinds of stories we tell about the economic well-being of the vast majority of children and older persons living in these societies and the sources of economic support on which they rely. Our paper combines the traditional NTA approach with Distributional National Accounts (DNA) in order to derive NTAs for the 90%. Using some (admittedly heroic) assumptions based on Distributional National Accounts and other sources, we remove the economic contributions of the richest 10% to national economies to derive NTA control totals (e.g., labor earnings, asset income, consumption, taxes, etc.) for 90% of the population (i.e., the non-rich). We argue that the shape of the age profiles already estimated by NTA country teams are a good representation of the average economic behavior of 90% of the population. Adjusting these age profiles to the new control totals, we derive NTAs for the 90%. Why not wait for the more accurate results which will soon be available from National Inequality Accounts (NIA) which use micro-data sets to estimates NTAs by socio-economic groups? First, our method serves as a preview of what we are likely to find once National Inequality Accounts (NIAs) are fully developed. Second, for countries which are unable to develop NIAs, our methods (if validated by NIAs) would serve as useful second-best estimates. Third, some of the issues addressed in our approach are relevant for the more detailed analysis of micro-data used in the construction of National Inequality Accounts (e.g., absence of the very rich from consumer expenditure surveys; correlation of under-reporting with income levels, etc.). Fourth, it’s good to explore synergies between the approaches of NTA and Distributional National Accounts. "

File: NTA2020 Lai_b

Paper: NTA2020 paper Lai_b

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