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Population Age Structure, Intergenerational Transfer, and Wealth: A New Approach, with Applications to the United States

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  • Ronald D. Lee

Abstract

Resources are reallocated across age and time by means of capital accumulation, credit transactions, and transfers. Each takes place through three channels: the family, financial markets, and public sector programs. These age-specific flows give rise to stocks of age-specific wealth. Weighting by population age distribution and summing yields aggregate wealth, which equals capital plus transfer wealth; the aggregate credit balance must be zero. Forms of aggregate wealth are related to properties of the macroeconomy. A framework is developed for relating flows to stocks. Flows and stocks for the United States in 1987 are analyzed by applying this framework to the 1987 CES. For example, the average household has about 100K in federal transfer wealth, a debt of 15K in state/local wealth, and a debt of 10K in interhousehold family transfers.

Suggested Citation

  • Ronald D. Lee, 1994. "Population Age Structure, Intergenerational Transfer, and Wealth: A New Approach, with Applications to the United States," Journal of Human Resources, University of Wisconsin Press, vol. 29(4), pages 1027-1063.
    • Handle: RePEc:uwp:jhriss:v:29:y:1994:4:1:p:1027-1063
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    Cited by:

    1. Sang-Hyop Lee & Jungsuk Kim & Donghyun Park, 2017. "Demographic Change and Fiscal Sustainability in Asia," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 287-322, October.
    2. Carlos Vidal-Meliá & Manuel Ventura-Marco & Juan Manuel Pérez-Salamero González, 2018. "Social Insurance Accounting for a Notional Defined Contribution Scheme Combining Retirement and Long-Term Care Benefits," Sustainability, MDPI, vol. 10(8), pages 1-36, August.
    3. Miles Corak & Christine Lietz & Holly Sutherland, 2005. "The Impact of Tax and Transfer Systems on Children in the European Union," Papers inwopa05/30, Innocenti Working Papers.
    4. Carlos Vidal-Meliá & Manuel Ventura-Marco & Juan Manuel Pérez-Salamero González, 2018. "Actuarial accounting for a notional defined contribution scheme combining retirement and longterm care benefits," Documentos de Trabajo del ICAE 2018-16, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
    5. Hippolyte d'Albis & Carole Bonnet & Xavier Chojnicki & Najat El Mekkaoui & Angela Greulich & Jérôme Hubert & Julien Navaux, 2019. "Financing the Consumption of the Young and Old in France," Population and Development Review, The Population Council, Inc., vol. 45(1), pages 103-132, March.
    6. Arrondel, Luc & Masson, Andre, 2006. "Altruism, exchange or indirect reciprocity: what do the data on family transfers show?," Handbook on the Economics of Giving, Reciprocity and Altruism, in: S. Kolm & Jean Mercier Ythier (ed.), Handbook of the Economics of Giving, Altruism and Reciprocity, edition 1, volume 1, chapter 14, pages 971-1053, Elsevier.
    7. Gál, Róbert Iván & Vanhuysse, Pieter & Vargha, Lili, 2016. "Pro-elderly welfare states within pro-child societies : Incorporating family cash and time into intergenerational transfers analysis," CEI Working Paper Series 2016-6, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    8. Lee, R., 2016. "Macroeconomics, Aging, and Growth," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 59-118, Elsevier.
    9. Hippolyte d'Albis & Carole Bonnet & Xavier Chojnicki & Najat El Mekkaouide Freitas & Angela Greulich & Jérôme Hubert & Julien Navaux, 2018. "Who pays for the consumption of young and old?," Working Papers halshs-01799724, HAL.
    10. Metzger, Christoph, 2016. "The German statutory pension scheme: Balance sheet, cross-sectional internal rates of return and implicit tax rates," FZG Discussion Papers 63, University of Freiburg, Research Center for Generational Contracts (FZG).
    11. d'Albis, Hippolyte & Badji, Ikpidi & El Mekkaoui, Najat & Navaux, Julien, 2020. "Private asset income in France: Is there a breakdown of intergenerational equity between 1979 and 2011?," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    12. Lili Vargha & Róbert Iván Gál & Michelle O. Crosby-Nagy, 2017. "Household production and consumption over the life cycle: National Time Transfer Accounts in 14 European countries," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 36(32), pages 905-944.
    13. Chien-Hao Fu, 2019. "Living arrangement and caregiving expectation: the effect of residential proximity on inter vivos transfer," Journal of Population Economics, Springer;European Society for Population Economics, vol. 32(1), pages 247-275, January.
    14. Adrien Auclert & Hannes Malmberg & Frederic Martenet & Matthew Rognlie, 2021. "Demographics, Wealth, and Global Imbalances in the Twenty-First Century," NBER Working Papers 29161, National Bureau of Economic Research, Inc.
    15. Miguel Sánchez-Romero, 2022. "Assessing the generational impact of COVID-19 using National Transfer Accounts (NTAs)," Vienna Yearbook of Population Research, Vienna Institute of Demography (VID) of the Austrian Academy of Sciences in Vienna, vol. 20(1), pages 107-141.
    16. Gál, Róbert I. & Szabó, Endre & Vargha, Lili, 2015. "The age-profile of invisible transfers: The true size of asymmetry in inter-age reallocations," The Journal of the Economics of Ageing, Elsevier, vol. 5(C), pages 98-104.
    17. Menashe-Oren, A. & Stecklov, G., 2017. "IFAD RESEARCH SERIES 17 - Population age structure and sex composition in sub-Saharan Africa: a rural-urban perspective," IFAD Research Series 280055, International Fund for Agricultural Development (IFAD).
    18. Miguel Sánchez-Romero & Concepció Patxot & Elisenda Rentería & Guadalupe Souto, 2013. "On the effects of public and private transfers on capital accumulation: some lessons from the NTA aggregates," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(4), pages 1409-1430, October.
    19. Gál, Róbert Iván & Szabó, Endre & Vargha, Lili, 2015. "A láthatatlan transzferek korprofilja. Az aszimmetria valódi mértéke a korosztályok közötti erőforrás-átcsoportosítás rendszerében [The age profile of invisible transfers: the true degree of asymme," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 621-637.
    20. Chomik, Rafal & McDonald, Peter & Piggott, John, 2016. "Population ageing in Asia and the Pacific: Dependency metrics for policy," The Journal of the Economics of Ageing, Elsevier, vol. 8(C), pages 5-18.
    21. Attiat Ott, 2013. "The Rate of Return to Aging: A Capital Stock Accounting," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 19(4), pages 355-366, November.
    22. Kim, Hyun Kyung & Lee, Sang-Hyop, 2021. "The effects of population aging on South Korea’s economy: The National Transfer Accounts approach," The Journal of the Economics of Ageing, Elsevier, vol. 20(C).
    23. Gál, Róbert Iván & Törzsök, Árpád, 2020. "The savings gap in Hungary," The Journal of the Economics of Ageing, Elsevier, vol. 17(C).
    24. Lam, David, 2006. "The demography of youth in developing countries and its economic implications," Policy Research Working Paper Series 4022, The World Bank.

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