Lifecycle Deficit Research Articles

Financing consumption over the lifecycle and overseas workers’ remittances: Findings from the 1999 and 2007 Philippine National Transfer Accounts

Abstract This paper compares the patterns of consumption, labor income earned and financing of consumption at different ages or stages of the lifecycle of the average Filipino between the years 1999 and 2007 using the Philippine (NTA) for these years. The comparison shows some changes worth noting and these include the overall increase in per capita labor income and consumption in real terms, the rise in real per capita private health spending at older ages, and change in reliance on labor income as a source to finance consumption of the young and the elderly. Additionally, the implications of changing the definition or treatment of remittances of Overseas Filipino Workers (OFWs) in the estimation of the Philippine NTA are demonstrated and discussed. The 2007 NTA was estimated two ways: first with OFW remittances defined as mainly inter-household transfers; and, second, with OFW remittances defined as mainly labor income (earnings) in the revised estimates. The implications of the change in definition is examined by comparing the first and revised sets of 2007 NTA estimates, and it is noted that the definitional change results in a smaller lifecycle deficit or a smaller gap between consumption and labor income in the revised estimates, among others.

Gender accounting of consumption and the life-cycle deficit for india

In the present paper, labour income, consumption and the life-cycle deficit (LCD) by gender for India is considered. From the individual’s perspective, private and public consumption for education, health and other goods and services has been taken into account. For either sex, the share of public consumption is about 17 per cent of the total consumption for health, education and others. Throughout the life cycle, the per capita annual labour income of a woman is lower than that of a man; even at the peak age of earning, it is only about one-sixth of a man’s per capita labour income at the corresponding age. Though a male consumes more for health, education and other goods and services, the gender gap is not as wide as that of income from labour. At the per capita level, a male experiences a monetary surplus during the working age range of 20 to 64 years and faces a life-cycle deficit only before entering the labour market and during old age, but a female must deal with a life-cycle deficit all through the life cycle.

LIFECYCLE DEFICIT, INTERGENERATIONAL PUBLIC AND FAMILIAL SUPPORT SYSTEM IN INDIA

The old and young consume public and private goods and services in excess of their labour income and incur lifecycle deficit (LCD). The share of the benefits received by the elderly 65 years and above and children below 20 years are, respectively, 6.3 and 42.1 per cent of the total familial in-transfer. The elderly themselves contribute to support, particularly for education of grandchildren, and their contribution is more than the benefit they receive from intra-household transfers. Contrary to the belief that in India, children provide old-age security, the elderly do not gain from the intra-household familial support. It is found that in India, there is a shortage of public funding to meet a greater share of the LCD of the population of children and the aged, and they would not have been able to consume essential goods and services if not for asset-based consumption and familial support.

Consumption and income over the lifecycle in Nigeria

This paper utilises National Transfer Accounts framework to estimate age profiles of consumption and income over the lifecycle in order to determine actual period of dependency in Nigeria. The paper quantifies inter-age monetary flows of consumption and labour income and subsequent economic lifecycle deficit and the implications this will have for social policy and human capital development. The results indicate that given the profiles of consumption and income over the lifecycle in Nigeria, child dependency is for the first 33 years of life while old-age dependency occurs from 63 years upwards. The period of lifecycle surplus span 30 years from 33-63 years. The structure of consumption and income flows reveals that Nigeria has a lifecycle deficit of N3.5 trillion in 2004. Since the population is highly skewed towards children, inter-generational flows are heavily skewed downwards. The deficits must then be covered through age reallocations of transfers and asset income.

Lifecycle Deficit and Public Age Reallocations for India’s Elderly Population: Evidence and Implications Based on National Transfer Accounts

Using the computational framework of National Transfer Accounts, this paper offers new results and explanations on the role of public support to India’s elderly population in 2004–05. New results refer to computed (a) lifecycle deficit (LCD) based on age profiles of aggregate labour income and consumption and (b) public age reallocations based on age profiles of transfers and asset based reallocations. The results show that the LCD of elderly population is about 34% of the LCD of all ages, or 3.74% of GNP. Surprisingly, net public transfers to elderly individuals are strongly negative and asset-based allocations are financed by dis-saving, because the taxes paid by the elderly population substantially exceed the benefits they receive and they pay both interest on previously accumulated public debt and paying off that debt. Public age reallocations finance elderly individuals’ consumption by less than 0.50% and the largest burden of financing public transfers falls on elderly for whom the net public transfers is −13.33% of labour income. The heavy burden on the elderly population is attributable in part to India's tax system and partly on the absence of programs that provide support to elderly individuals. If the present private sector's support for elderly individuals is not sustainable due to changes in the social obligations and in the absence of a universal pension scheme, a reduction in the direct tax outflows for the elderly population may be a policy imperative in India's public age reallocations.

Generational Transfers and Population Aging in Latin America

The effects of estimating expected effects of life-cycle on the economy also known as are both positive and negative meaning that population aging in the region involves not only challenges and constraints but also opportunities for development and gains in standard of living. This book chapter examines some of the probable effects of population aging in Latin America within the framework of the National Transfer Accounts (NTA) project. It estimates the life-cycle deficit and intergenerational transfers in Brazil Chile Costa Rica Mexico and Uruguay. This chapter argues that the increase in aggregate life-cycle deficit at late ages will pose serious challenges for Latin American economies and governments. The data and statistical findings provide information on the economic life cycle and asset income in Latin America the two demographic dividends generational transfers to young and old ages and generational transfers and demographic dividends. The generational transfer system prevalent in Latin America will make the national treasury the most important causality of population aging. The author discusses some of the intergenerational reallocations that deal with the countries life-cycle deficits and concludes by stating that the only major burden confronting Latin American families is the quickly growing need for long-term care for elderly relatives.