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Saving, Wealth and the Transition from Transfers to Individual Responsibility: The Cases of Taiwan and the United States

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  • Ronald Lee
  • Andrew Mason
  • Timothy Miller

Abstract

Under the life-cycle saving model, population aging leads to an increased demand for life-cycle wealth. Changes in transfer systems create or destroy one component of life-cycle wealth-transfer wealth. The decline in the familial transfer system in Taiwan and reform of the US Social Security system are two examples of ways that transfer wealth is reduced. The combined effects of aging and changes in transfer systems are analyzed using simulation analysis. Rapid aging and radical decline in transfer systems lead to a large but transitory surge in aggregate saving. Capital per worker increases rapidly and remains at a high level. Copyright The editors of the "Scandinavian Journal of Economics", 2003 .

Suggested Citation

  • Ronald Lee & Andrew Mason & Timothy Miller, 2003. "Saving, Wealth and the Transition from Transfers to Individual Responsibility: The Cases of Taiwan and the United States," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(3), pages 339-358, September.
  • Handle: RePEc:bla:scandj:v:105:y:2003:i:3:p:339-358
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    References listed on IDEAS

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    1. Masao Ogaki & Jonathan D. Ostry & Carmen M. Reinhart, 1996. "Saving Behavior in Low- and Middle-Income Developing Countries: A Comparison," IMF Staff Papers, Palgrave Macmillan, vol. 43(1), pages 38-71, March.
    2. Taylor, Alan M & Williamson, Jeffrey G, 1994. "Capital Flows to the New World as an Intergenerational Transfer," Journal of Political Economy, University of Chicago Press, vol. 102(2), pages 348-371, April.
    3. Martin Feldstein, 1997. "Transition to a Fully Funded Pension System: Five Economic Issues," NBER Working Papers 6149, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:

    1. Bernardo Lanza Queiroz & Cássio Maldonado Turra & Elisenda Renteria Perez, 2006. "The Opportunities We Cannot Forgo: Economic Consequences Of Population Changes In Brazil," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 32, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Lee, R., 2016. "Macroeconomics, Aging, and Growth," Handbook of the Economics of Population Aging, Elsevier.
    3. Gemma Abio Roig & Concepció Patxot Cardoner & Miguel Sánchez-Romero & Guadalupe Souto Nieves, 2015. "The Welfare State and the demographic dividend: A cross-country comparison," UB Economics Working Papers 2015/332, Universitat de Barcelona, Facultat d'Economia i Empresa, UB Economics.
    4. Manabu Shimasawa & Kazumasa Oguro & Minoru Masujima, "undated". "Population Aging, Policy Reforms, and Lifetime Net Tax Rate in Japan: A Generational Accounting Approach," Discussion papers ron258, Policy Research Institute, Ministry of Finance Japan.
    5. Kam-Ki Tang & Benjamin ShiJie Wong, "undated". "The Ageing, Longevity and Crowding Out Effects on Private and Public Savings: Evidence from Dynamic Panel Analysis," MRG Discussion Paper Series 3409, School of Economics, University of Queensland, Australia.
    6. Elena Jarocinska & Anna Ruzik-Sierdzinska & Theo Nijman & Andres Vork & Niku Määttänen & Robert Gál, 2014. "The impact of living and working longer on pension income in five European countries: Estonia, Finland, Hungary, the Netherlands and Poland," CASE Network Studies and Analyses 0476, CASE-Center for Social and Economic Research.
    7. Hendrik P. van Dalen, 2007. "Global Aging and Economic Convergence: A Real Option or Still a Case of Science Fiction?," Tinbergen Institute Discussion Papers 07-051/1, Tinbergen Institute.
    8. Antoine Bommier, "undated". "Mortality Decline, Impatience and Aggregate Wealth Accumulation with Risk-Sensitive Preferences," Working Papers ETH-RC-14-006, ETH Zurich, Chair of Systems Design.
    9. Concepció Patxot & Elisenda Rentería & Miguel Romero & Guadalupe Souto, 2012. "Measuring the balance of government intervention on forward and backward family transfers using NTA estimates: the modified Lee arrows," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(3), pages 442-461, June.
    10. Andrew Mason & Ronald Lee & Sang-Hyop Lee, 2010. "The Demographic Transition and Economic Growth in the Pacific Rim," NBER Chapters,in: The Economic Consequences of Demographic Change in East Asia, NBER-EASE Volume 19, pages 19-55 National Bureau of Economic Research, Inc.
    11. repec:dem:demres:v:36:y:2017:i:48 is not listed on IDEAS
    12. Ronald Lee, 2012. "Macroeconomic Implications of Demographic Changes: A Global Perspective," IMES Discussion Paper Series 12-E-11, Institute for Monetary and Economic Studies, Bank of Japan.
    13. Bommier, Antoine, 2009. "Mortality Decline and Aggregate Wealth Accumulation," TSE Working Papers 09-050, Toulouse School of Economics (TSE).

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