1. Institute for Mathematical Methods in Economics Economics National transfer accounts for Austria Implications for the projections of life cycle deficits, demographic dividends and support ratio Joze Sambt University of Ljubljana, Faculty of Economics Alexia Prskawetz Vienna University of Technology and Vienna Institute of Demography

2. Institute for Mathematical Methods in Economics Economics Structure of the talk 1. National transfer accounts – methodology 2. National transfer accounts for Austria 3. Projections of life cycle deficit, first demographic dividend and support ratio for Austria 4. Life cycle deficit, first demographic dividend and support ratio for European NTA countries

3. 34 countries Europe: Austria Finland France Germany Hungary Slovenia Spain Sweden United Kingdom http://www.ntaccounts.org/web/nta/showhttp://europe.ntaccounts.org/web/nta/show/

4. Institute for Mathematical Methods in Economics Economics National transfer accounts methodology

5. Institute for Mathematical Methods in Economics Economics Source: Andrew Mason, 2007.

6. Institute for Mathematical Methods in Economics Economics

7. Institute for Mathematical Methods in Economics Economics National transfer accounts for Austria

8. ESTIMATING AGE PROFILES FOR AUSTRIA DATA CES 1999/200020,028 observations for individuals 7,098 observations on households ECHP 20005,801 observations on individuals 2,644 observations on households + many additional information from health insurance, pension insurance, etc. Institute for Mathematical Methods in Economics Economics

9. LIFE CYCLE DEFICIT 2157 36 years Institute for Mathematical Methods in Economics Economics

10. COMPONENTS of LCD Institute for Mathematical Methods in Economics Economics

11. ASSET REALLOCATION Institute for Mathematical Methods in Economics Economics

12. Institute for Mathematical Methods in Economics Economics Projections of (a)life cycle deficit (b)first demographic dividend and (c)support ratio for Austria

13. Institute for Mathematical Methods in Economics Economics Population Structure Austria, 2008 Source: Eurostat

14. Population Structure Austria, 2023 (the year of the lowest value of the first demographic dividend) Source: Eurostat Institute for Mathematical Methods in Economics Economics

15. (a) PROJECTING LIFECYCLE DEFICIT Austria, 2000-2050; EUROSTAT Population Projections (EUROPOP2008) Institute for Mathematical Methods in Economics Economics

16. PERCENTAGE INCREASE IN LCD Austria, 2000-2050; EUROSTAT Population Projections (EUROPOP2008) Institute for Mathematical Methods in Economics Economics

17. Composition of the Lifecycle deficit (LCD) by age groups Austria, 2000-2050; EUROSTAT Population Projections Institute for Mathematical Methods in Economics Economics

18. (b) FIRST DEMOGRAPHIC DIVIDEND GDP per capita support output per (output per effective = ratio x effective worker consumer)

19. Projecting the first demographic dividend Austria, 2000-2050; EUROSTAT Population Projections EUROPOP2008 Institute for Mathematical Methods in Economics Economics

20. (c) SUPPORT RATIO Institute for Mathematical Methods in Economics Economics The demographic change implies a change in relative size of self supporting and dependent population. the support ratio :  = LF / CONLF …. effective labor force CON …. effective number of consumers influenced by -> consumption needs of people of different ages -> changes in retirement age -> labor force participation rates -> earning power of those who are working Source: Cutler et al. (1999) An Aging Society: Opportunity or Challenge, Brookings Papers on Economic Activity

21. Alternative 1: CON1 =  i=1…99 N i (common dependency ratio) Alternative 2: differentiate resource needs by age CON2 =  i=1…99 S i N i (needs weighted consumption measure) Alternative 1: LF1 =  i=20…64 N i (common dependency ratio) Alternative 2: LF2 =  i=15…80 w i PR i N i (adjust for wages and lfpr by age) Institute for Mathematical Methods in Economics Economics

22. Actual and Projected Changes in Support Ratio (relative to 1990), Four Alternative Measures, Austria, 1950-2060, EUROPOP2008 Population Projections LF2/CON2 LF2/CON1 LF1/CON2 LF1/CON1 LF2/CON1 LF1/CON1 LF2/CON2 LF1/CON2

23. Institute for Mathematical Methods in Economics Economics (a) life cycle deficit, (b) first demographic dividend and (c) support ratio for European NTA countries

24. (a) Lifecycle deficit for EuroNTA countries Germany: 31 (27-57) Slovenia: 31 (25-55)

25. Lifecycle deficit for EuroNTA countries Sweden: 38 (25-62)

26. (b) First demographic dividend Periods of positive 1 st dem. dividend

27. (c) Four alternative measures of support ratio (relative to 2000) Austria Finland France Germany

28. Four alternative measures of support ratio (relative to 2000) HungarySlovenia Spain Sweden

29. END Institute for Mathematical Methods in Economics Economics