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Consumption, Income, and Intergenerational Reallocation of Resources: Application of NTA in the Philippines, 1999

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  • Salas, J.M. Ian S.
  • Racelis, Rachel H.

Abstract

A country’s population consists of persons at different ages and stages of their economic lifecycle. Those in the population that are incurring lifecycle deficits would not be able to sufficiently support themselves, while those generating surpluses would have more than they require. Resources then have to be reallocated or transferred from the surplus age groups (working ages) to the deficit age groups (children and elderly) and there are various ways to achieve these across age transfers or intergenerational reallocations. Lifecycle consumption and income patterns, and the systems for age reallocations in the Philippines, are examined in this paper using the 1999 NTA Flow Accounts estimates. This paper finds that: (1) Filipinos incur lifecycle deficits and do not become self-sufficient until after age 25, lifecycle surpluses are generated for the next 35 years, and at age 61 consumption starts to exceed labor earnings and lifecycle deficits are once again incurred; (2) In 1999 the estimated aggregate lifecycle deficits amounted to about PhP1,061 billion in current prices (with the young and elderly accounting for 93 percent and 7 percent, respectively) while surpluses generated by the working age group amounted to PhP461 billion, or an excess of PhP600 billion of deficits over surplus; (3) The mix of systems that support the consumption of Filipinos in the deficit ages differ between the young and the elderly groups, with the mix also changing with age for the elderly deficit group; (4) The financing of consumption of children up to age 14 is primarily by public and private transfers, while for the age group 15-25 about half of consumption is already paid for by own wages but a significant part continues to be supported by private transfers; and (5) Consumption of the elderly is financed by own earnings, asset reallocation, private transfers (starting age 73) and to a very small extent by public transfers (starting age 80).

Suggested Citation

  • Salas, J.M. Ian S. & Racelis, Rachel H., 2008. "Consumption, Income, and Intergenerational Reallocation of Resources: Application of NTA in the Philippines, 1999," Discussion Papers DP 2008-12, Philippine Institute for Development Studies.
    • Handle: RePEc:phd:dpaper:dp_2008-12
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    References listed on IDEAS

    as
    1. Jose Encarnacion, Jr., 1977. "Income Distribution in Manila, Luzon, the Visayas and Mindanao," UP School of Economics Discussion Papers 197707, University of the Philippines School of Economics.
    2. Michael M. Alba, 1998. "Measuring the Extent and Components of the Gender Wage Differential in the Philippines," UP School of Economics Discussion Papers 199801, University of the Philippines School of Economics.
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    Cited by:

    1. Herrin, Alejandro N. & Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2015. "Philippines 2011 National Transfer Accounts Estimates of Consumption and Labor Income Age Profiles: Discussions on the 1991-2011 Age Profile Change and Implications on Economic Gains from the First De," Discussion Papers DP 2015-45, Philippine Institute for Development Studies.
    2. Racelis, Rachel H. & Abrigo, Michael R.M. & Salas, J.M. Ian, 2015. "Financing consumption over the lifecycle and overseas workers’ remittances: Findings from the 1999 and 2007 Philippine National Transfer Accounts," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 69-78.
    3. Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2012. "Philippines 2007 National Transfer Accounts: Financing Consumption and Lifecycle Deficit by Income Group," Discussion Papers DP 2012-33, Philippine Institute for Development Studies.
    4. Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2012. "Philippines 2007 National Transfer Accounts: Consumption, Income, and Intergenerational Reallocation of Resources - Revised Estimates," Discussion Papers DP 2012-35, Philippine Institute for Development Studies.
    5. Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2012. "Philippines 2007 National Transfer Accounts: Consumption, Labor Income, and Lifecycle Deficit by Income Group," Discussion Papers DP 2012-32, Philippine Institute for Development Studies.
    6. Racelis, Rachel H. & Abrigo, Michael Ralph M. & Salas, J.M. Ian S. & Herrin, Alejandro N., 2015. "Philippines 2011 National Transfer Accounts Estimates of Consumption and Labor Income Age Profiles: Discussions on the 1991-2011 Age Profile Change and Implications on Economic Gains from the First De," Research Paper Series DP 2015-45, Philippine Institute for Development Studies.
    7. Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2012. "Philippines 2007 National Transfer Accounts: Consumption, Income, and Intergenerational Reallocation of Resources," Discussion Papers DP 2012-29, Philippine Institute for Development Studies.
    8. Salas, J.M. Ian S. & Abrigo, Michael Ralph M. & Racelis, Rachel H., 2014. "Comparing the 1999 and 2007 Philippine NTA Estimates and Examining the Effects of a Definitional Change of Overseas Workers` Remittances," Discussion Papers DP 2014-24, Philippine Institute for Development Studies.

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    1. Rachel H. Racelis & J. M. Ian Salas, 2011. "Changes in patterns of Philippine lifecycle consumption and labor income between 1994 and 2002," Chapters, in: Ronald Lee & Andrew Mason (ed.), Population Aging and the Generational Economy, chapter 18, Edward Elgar Publishing.
    2. Rachel H. Racelis & J.M. Ian Salas, 2008. "Have Lifecycle Consumption and Income Patterns in the Philippines Changed between 1994 and 2002?," Development Economics Working Papers 22683, East Asian Bureau of Economic Research.

    More about this item

    Keywords

    National Transfer Accounts; economic lifecycle; intergenerational transfer; income age profile; consumption age profile; lifecycle deficit;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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