Resources are reallocated across age and over time for many reasons, including the need to provide for childhood and old age; impatience to consume; the interest rate incentive for waiting to consume; the desire to leave bequests; the wish to hedge against risk; the desire to invest in children; the ability of parents to appropriate the labor services of their children; and the uncertainty of survival. Aggregate reallocations across age have never been studied in a comprehensive way, theoretically or empirically; this project aims to do so, building on work in mathematical demography, aging, economic demography, and overlapping generation models. The project will show that there are only four general types of age reallocation system, of which only three types appear important: capital accumulation, credit transactions, and interage transfers. Properties of each type of system will be studied. Each system generates average age specific wealth, the difference between the present value of expected future allocations into the system and receipts from it. However, when averaged over the population as a whole, aggregate credit must be zero, and the total societal demand for wealth, W, must be met by total holdings of capital, K, and transfer wealth, T. Each type of reallocation takes place through three channels: the family, the market, and the public sector. The project uses this framework to integrate selected themes in the literature including the demography of pension systems, overlapping generation models, economic-demography growth models with age structured populations, life cycle savings, bequest theories of savings, consequences of population aging, generational accounting, optimal population growth rates, public sector externalities to childbearing, and effects of demographic change on aggregate saving. Guided by the formal analysis, an accounting framework for measuring these interage allocations will be developed. It will be used to describe and summarize transfers, capital formation, and credit transactions through the family, the public sector and financial markets for the U.S. in various time periods, based mainly on the CES, and for several Third World populations, based on MFLS2 and Living Standards Surveys. Using a synthetic cohort method under steady state assumptions, these estimates reveal patterns of reallocation across ages; provide a decomposition of total age specific and societal wealth; provide comparative static estimates of the effects of population aging from low fertility or rom low mortality; indicate whether the net direction of reallocations is upwards or downwards by age for W and each form of T; and provide other descriptive measures of theoretical and policy interest. Dropping the steady state assumptions, additional empirical analyses develop longitudinal estimates of reallocations. Other work examines the consequences of dynamic (as opposed to comparative static) demographic change operating through the reallocation systems, and calculates probability distributions for the impact of future demographic change in the US on taxes or benefits for public sector transfers.
| Robinson, Rachel Sullivan; Lee, Ronald D; Kramer, Karen L (2008) Counting women's labour: a reanalysis of children's net production using Cain's data from a Bangladeshi village. Popul Stud (Camb) 62:25-38 |
| Cyrus Chu, C Y; Lee, Ronald D (2006) The co-evolution of intergenerational transfers and longevity: an optimal life history approach. Theor Popul Biol 69:193-201 |
| Li, Nan; Lee, Ronald (2005) Coherent mortality forecasts for a group of populations: an extension of the Lee-Carter method. Demography 42:575-94 |
| Lee, Ronald; Miller, Timoth (2002) An approach to forecasting health expenditures, with application to the U.S. Medicare system. Health Serv Res 37:1365-86 |
| Miller, T (2001) Increasing longevity and Medicare expenditures. Demography 38:215-26 |
| Lee, R; Miller, T (2001) Evaluating the performance of the Lee-Carter method for forecasting mortality. Demography 38:537-49 |
| Lee, R; Tuljapurkar, S (1997) Death and taxes: longer life, consumption, and social security. Demography 34:67-81 |
