A Preliminary Look at the Changing Patterns of Intergenerational Transfers and Life-Cycle Consumption in Finland 1990-2006 The 41st EWC Summer Seminar on Population, The 7th National Transfer Accounts Conference 6 – 19 June 2010 East-West Center, Honolulu, Hawaii Marja Riihelä, Government Institute for Economic Research Risto Vaittinen, Finnish Centre for Pensions Reijo Vanne, Finnish Pension Alliance
Work in progress • Final phase • NTAs 1966 – 2006…2010 • Annually?
• 1st phase (= paper under preparation) • NTAs annually 1990 – 2006
• Here • Aggregate LCD annually 1975 - 2007 • LCD by age annually 1990 – 2006 • Annual income distribution data, incl. public money transfers in and out • Household surveys 1990, 1995, 2001 and 2006, missing years by weighting
• LCD finance not yet
• Questions • Are there business cycle effects? • Are there structural changes?
Ratio of working age to total population
Source: UN
Population share of working aged and employed persons in 1975-2007 65
60
55
50 Employed (national accounts) 45
40
Source: Statistics Finland
2004 2005 2006 2007
2001 2002 2003
1997 1998 1999 2000
1993 1994 1995 1996
1990 1991 1992
1986 1987 1988 1989
1982 1983 1984 1985
1979 1980 1981
35 1975 1976 1977 1978
% of average population
Working aged 20-64 (population statistics)
Real growth rate in Finland in 1975 2007 4,5
5 4
4,1
3,3
3
2,0
2 1 0 -1 -2
-1,5
-3 1975-1989
-2,5 1990-1993
1994-2000
2001-2003
Source: Statistics Finland
2004-2007
20082011**
Aggregate LCD as percentage of aggregate labor income in Finland 1975 – 2007 and a comparison to Sweden 25.0
22.5
20.0
17.5
15.0
12.5
10.0
7.5
5.0
2.5
-2.5
LCD FIN
LCD SWE
Sources: Statistics Finland, own calculations, NTA database
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
1976
1975
0.0
Private and public Re-allocations 50 40
+ = contributing to financing LCD 20 10 0 -10 -20
Private saving Private asset income
Public saving Public asset income
2007
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
-30 1975
% of labor income
30
Average Age of Consumption and Production 44,0 43,0 42,0 41,0 40,0 39,0 38,0 37,0 36,0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Average Age of Consumption
Averge Age of Production
Length of Life Cycle Surplus Period in 1990 -2006 70 60 50 40
35
32
31
30
30
29
29
30
32
32
32
33
33
32
32
32
32
30 20 10 0 0 9 9 1
1 9 9 1
2 9 9 1
3 9 9 1
4 9 9 1
5 9 9 1
6 9 9 1
7 9 9 1
8 9 9 1
9 9 9 1
0 0 0 2
1 0 0 2
2 0 0 2
3 0 0 2
4 0 0 2
5 0 0 2
6 0 0 2
Normalized [yl(x)/yl(30-49)] Per Capita Wages by Age in Finland 1.200
1.000
0.800
0.600
0.400
0.200
0.000
0
5
10
15
20
25
30
1990
35
40
1995
45
50
2001
55
60
2006
65
70
75
80
85
90
Changing Pattern of LCS by Age as share of total labor income 0,04
0,03
0,02
0,01
0
-0,01
-0,02
-0,03 0
4
8
12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100 1990
1995
2001
2006
Pieces of per capita LCDs for cohorts as share of normalized labor income
