Full Generational Accounts: What Do We Give to the Next Generation?
What do we give to the next generation? Do we transfer wealth and human capital to our children, or do we saddle them with debt and obligations to support us in our old age? Standard Generational Accounts (GA) calculate the net present value of public sector taxes and benefits. Full Generational Acc...
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| Published in: | Population and development review Vol. 43; no. 4; pp. 695 - 720 |
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| Main Authors: | , , , |
| Format: | Journal Article |
| Language: | English |
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New York
Wiley Subscription Services, Inc
01-12-2017
Blackwell Publishing Ltd |
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| Abstract | What do we give to the next generation? Do we transfer wealth and human capital to our children, or do we saddle them with debt and obligations to support us in our old age? Standard Generational Accounts (GA) calculate the net present value of public sector taxes and benefits. Full Generational Accounts (FGA) add to this the present value of expected private transfers received over a lifetime, including parental costs of childrearing, bequests, and inter vivos transfers. We introduce three versions of FGA. Using data from National Transfer Accounts (NTA), we calculate FGAs for the United States, where public transfers to children and the elderly are important, and for Taiwan, where the family plays a larger role in both. We decompose the FGA into public and private components, and into human capital investments (health, education), bequests, and other consumption. FGAs indicate substantial transfers to the generation born in 2010. |
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| AbstractList | Each generation supports the next and endows it with assets and human capital. Or so we like to think. But in rich industrial countries, increased public sector transfers to the elderly and rising public debt have redistributed income upward from young to old, while increased annuitization of assets, reverse mortgages, and longer life in retirement may have reduced asset transfers to younger generations through bequests and gifts. Public higher education, which was formerly a gift to the younger generation, has increasingly become a self-investment by the young, financed by loans. The unsustainability of public transfer programs is one aspect of the erosion of transfers to the young, but it is only a part. To be sure, there are also forces operating in the opposite direction, since lower fertility means greater levels of consumption, human capital investment, and bequests per child, both public and private, other things equal. What do we give to the next generation? Do we transfer wealth and human capital to our children, or do we saddle them with debt and obligations to support us in our old age? Standard Generational Accounts (GA) calculate the net present value of public sector taxes and benefits. Full Generational Accounts (FGA) add to this the present value of expected private transfers received over a lifetime, including parental costs of childrearing, bequests, and inter vivos transfers. We introduce three versions of FGA. Using data from National Transfer Accounts (NTA), we calculate FGAs for the United States, where public transfers to children and the elderly are important, and for Taiwan, where the family plays a larger role in both. We decompose the FGA into public and private components, and into human capital investments (health, education), bequests, and other consumption. FGAs indicate substantial transfers to the generation born in 2010. |
| Author | McCarthy, David Sefton, James Lee, Ronald Sambt, Jože |
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| Cites_doi | 10.2139/ssrn.3052381 10.4337/9780857930583.00040 10.1111/j.1728-4457.2010.00315.x 10.4337/9780857930583 10.4337/9781847208583.00014 10.2307/1882640 10.3386/w3589 10.4337/9780857930583.00025 |
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| Copyright | 2017 The Population Council, Inc. 2017 Wiley Periodicals, Inc |
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| References | 1988; 103 1987 2007 1995 2016 2012b 2012a 2010; 36 1991 2011 Nerlove Marc (e_1_2_14_9_1) 1987 e_1_2_14_2_1 e_1_2_14_4_1 e_1_2_14_3_1 e_1_2_14_6_1 e_1_2_14_11_1 e_1_2_14_5_1 e_1_2_14_8_1 Razin Assaf (e_1_2_14_10_1) 1995 e_1_2_14_13_1 e_1_2_14_7_1 e_1_2_14_12_1 |
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| Snippet | What do we give to the next generation? Do we transfer wealth and human capital to our children, or do we saddle them with debt and obligations to support us... Each generation supports the next and endows it with assets and human capital. Or so we like to think. But in rich industrial countries, increased public... |
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| SubjectTerms | Assets Children Consumption DATA AND PERSPECTIVES Debt Education Fertility Generations Gift giving Higher education Human capital Income Industrialized nations Investment Investments Loans Mortgages Older people Public debt Public sector Retirement |
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| Title | Full Generational Accounts: What Do We Give to the Next Generation? |
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