National Transfer Accounts and intergenerational redistribution in European institutional settings

In all societies the very young and the very old consume more than they produce. The survival and welfare of the human species therefore require transfers of resources across ages through family, public taxation or capital market saving. This fundamentally affects the working of financial markets, wealth accumulation and public finance. The project maps these resource flows into a National Accounts framework as part of an international project creating comparable National Transfer Accounts (NTAs). When complete, National Transfer Accounts will (a) provide estimates with sufficient historical depth to study the evolution of intergenerational transfer systems; (b) the consequences of alternative approaches to age reallocations embodied in public policy with respect to pensions, health care, education and social institutions, e.g. the extended family; and (c) the social, political, and economic implications of population ageing. In an ageing Europe the kind of knowledge generated in this project is crucial for the shaping of future social and economic policies. Funding is requested to support the current European NTA teams to perform comparative analyses of the data and adapt the methodology to European institutional settings. NTA will yield important information on wealth accumulation, family economics, equity issues across generations and gender as well as a better understanding of public transfer and consumption systems. Indicators and projections to determine future sustainability of transfer systems and consumption levels can be computed from the data. The comparative analysis of differences in the NTA patterns yields a new approach to understanding the institutional impact of these flows. The country contributions from Spain, Sweden, Austria, Hungary and the Associate Partners in Germany, France and Finland encompass team members with different expertise and cover a wide sample of different institutional arrangements for intergenerational redistribution. For Austria, cross sectional NTAs have been set up for 2000. First results indicate that Austria is rather peculiar in the European comparison showing rather low levels of education and low labor force participation at older ages. Within the collaborative NTA project we will help to refine and develop the NTA methodology and aim for a longitudinal analysis of NTAs in Austria.

In all societies the very young and the very old consume more than they produce. The survival of modern welfare therefore requires transfers of resources across ages through family, public taxation or capital market saving. This fundamentally affects the working of financial markets, wealth accumulation and public finance. The aim of the project was to map these resource flows into a National Accounts framework for Austria and Slovenia as part of an international project that created comparable National Transfer Accounts (NTAs). We were particularly interested in the consequences of alternative approaches to age reallocations which are embodied in public policy with respect to pensions, health care, education and social institutions, e.g. the extended family. The findings of this project are crucial for shaping future social and economic policies in an ageing Europe. Key results indicate that qualitatively the age pattern of economic activities (i.e. the type and intensity of economic activities at each age) is found to be similar in all European countries: while consumption is rather equally distributed across all age groups, production activities are concentrated between the ages 25 to about 60. Consumption of children is financed through transfers: mainly through private transfers (e.g. from the parents to the child), but to a considerable extent also through public transfers (e.g. in form of publicly financed education). Retirees finance their consumption partly through asset income, but in most European countries the bulk of consumption of elderly persons is financed through public transfers such as pensions and publicly provided health- and long-term care services.However, the quantitative shape of the economic life cycle differs considerably across European countries depending on country-specific characteristics of individuals (e.g. the level and type of education, and labour market entry and exit ages), institutional arrangements (e.g. family policies and labour market regulations), and the overall macroeconomic situation of a country.Our results clearly evidence that a change in the age structure of the population also requires a change in the economic life cycle. A reform of the welfare state needs to also take into account private transfers, in particular those that relate to services produced by unpaid work.