Constructing a base-line Constructing a base-line NTA for Chile: preliminary NTA for Chile: preliminary

findingsfindingsJorge BravoJorge Bravo

with the assistance of Mauricio Holzwith the assistance of Mauricio HolzECLAC/CELADE-Population DivisionECLAC/CELADE-Population Division

Presented at the 3Presented at the 3rdrd Meeting of the Working Meeting of the Working Group on Macroeconomic Aspects of Group on Macroeconomic Aspects of Intergenerational Transfers, Honolulu, Intergenerational Transfers, Honolulu,

Hawaii, January 20-22, 2006Hawaii, January 20-22, 2006

AcknowledgementsAcknowledgements

Team at ECLAC/CELADE, NTA project Team at ECLAC/CELADE, NTA project groupgroup

Government of Chile: Budget Office, Government of Chile: Budget Office, Ministry of Finance; National Ministry of Finance; National Statistical Institute, Planning MinistryStatistical Institute, Planning Ministry

Funding from the government of Funding from the government of France, NIH projectFrance, NIH project

A base-line NTA for Chile: A base-line NTA for Chile: results to dateresults to date

1.1. Private and public consumptionPrivate and public consumption

2.2. Labor earnings and cross-over ages: Labor earnings and cross-over ages: a closer looka closer look

3.3. Public spending: in-kind and cash Public spending: in-kind and cash transferstransfers

4.4. TaxesTaxes

a)a) Estimated Estimated privateprivate consumption with data consumption with data from Budget and Expenditure Survey from Budget and Expenditure Survey (BES) 1996/97, imputing all allocable (BES) 1996/97, imputing all allocable items (food, alcohol and tobacco, items (food, alcohol and tobacco, clothing, education), and applied clothing, education), and applied standard weights to the reststandard weights to the rest

b)b) PublicPublic consumption was estimated by consumption was estimated by matching social expenditure items with matching social expenditure items with program-specific age profiles identified in program-specific age profiles identified in the Socioeconomic Characterization the Socioeconomic Characterization Survey (CASEN) of 2000Survey (CASEN) of 2000

1. Private and public consumption1. Private and public consumption

Chile: per-capita Consumption, 2004

0

1

2

3

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

AgeSource: Bravo and Holz (2005), based on BES 1996/97, CASEN 2000 and Public Budget Office, 2004.

2004

mill

ion

peso

s

total

private

public

Public consumptionPublic consumption

Chile : per capita public consumption 2004

0100200

300400500600

700800900

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

AgeSource: Bravo and Holz (2005), based on official data (Public Budget Office, 2004; BES, 1996/97)

Thou

sand

pes

os

OtherHealthEducationTraining

c) Labor income was obtained from c) Labor income was obtained from same source used for private same source used for private consumption, i.e., the Budget and consumption, i.e., the Budget and Expenditure Survey (BES). Defined as Expenditure Survey (BES). Defined as main and secondary occupation main and secondary occupation earnings, including allowances and earnings, including allowances and earnings of independent workers earnings of independent workers (formal and informal)(formal and informal)

2. Labor earnings2. Labor earnings

Chile : Per-capita Labor earnings and Consumption, 2004

0

1

2

3

4

5

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

AgeSource: Bravo and Holz (2005), based on data of BES, 1996/97. Public Budget Office, 2004

2004

Mill

ion

Pes

os

Labor earnings

Consumption

Labor earnings: a closer lookLabor earnings: a closer look

Chile: Wages, Labor force participation and Unemployment, 2000

0

100

200

300

400

500

600

700

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95Age

Source: Socioeconomic Characterization Survey (Casen 2000).

YL-

pc, t

hous

and

peso

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

LF P

art,

Un

empl

o

Ylp

Labor Force

Rate of Unemp.

Labor earnings: a closer lookLabor earnings: a closer look

Chile: Wages , Labor force participation and Unemployment, 1990

0

20

40

60

80

100

120

140

160

180

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

AgeSource: Socioeconomic Characterization Survey ( CASEN 2000)

YL

-pc,

th

ou

san

d P

eso

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

LF

par

tici

pat

ion

, Un

emp

lo

Yl-pcLabor Force Participation Unemployment.

Labor earnings: a closer lookLabor earnings: a closer look

Labor force participation rates, 2000

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

Chile

Uruguay

Brasil

Age

Source: CASEN Survey (2000), CELADE (1999) estimates

Labor earnings: a closer lookLabor earnings: a closer look

Labor force participation rates, 1990

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

AgeSource: CASEN Survey (1990), CELADE (1999) estimates

BrasilUruguay

Chile

3. Public spending/transfers3. Public spending/transfers

Chile: Aggregate Public Transfers, 2004

0

50,000

100,000

150,000

200,000

250,000

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Age

Source: Bravo and Holz (2005), based on data from the Public Budget Office, 2004, and CASEN, 2000

Bill

ion

pes

os

OtherPensionsHealthEmplymentEducation

Public transfersPublic transfers

Chile: Per-capita Public Transfers, 2004

0

1

2

3

4

5

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

Age

Source: Bravo and Holz (2005), based on data from the Public Budget Office, 2004, and CASEN, 2000

Mill

ion

pes

os

OtherPensionsHealthEmploymentEducation

Public transfersPublic transfers

Chile: Aggregate In Kind Transfers, 2004

0

50

100

150

200

250

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

age

Bill

ion

Pes

os

OtherHealth

EducationTraining

Source: Bravo and Holz (2005), based on official data (Public Budget Office, 2004; BES, 1996/97)

Public transfersPublic transfers

Chile : Aggregate Cash Transfers, 2004

0

20

40

60

80

100

120

140

160

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95

age

Bill

ion

Pes

os Pensions

Subsidies

Source: Bravo and Holz (2005), based on official data (Public Budget Office, 2004; BES, 1996/97)

4. Taxes4. Taxes

Indirect taxes: value-added, excise, Indirect taxes: value-added, excise, trade tariffs & others. trade tariffs & others. 75% of 75% of revenue, 53% is VArevenue, 53% is VA

Direct taxes: First category (on Direct taxes: First category (on profits, paid by firms), second profits, paid by firms), second category (payroll); global (all category (payroll); global (all income); additional (levied on non-income); additional (levied on non-residents withdrawals and residents withdrawals and remittances). remittances). 25% of revenue25% of revenue

TaxesTaxes

Chile: Taxes by major category, 2004

0

100

200

300

400

500

600

700

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90

ageSource: Bravo and Holz (2005), based on data from SII, 2004 and BES, 1996/97

0

0.5

1

1.5

2Income TaxesValue-AddedExcise Taxes

A base-line NTA for Chile: plan for A base-line NTA for Chile: plan for 20062006

Finalize base-year estimates: adjustment Finalize base-year estimates: adjustment to NIPA totals, check consistency of to NIPA totals, check consistency of income profile with other statistical income profile with other statistical sources & compare with other countriessources & compare with other countries

Implement measurements of lifecycle Implement measurements of lifecycle deficit and public transfers for at least one deficit and public transfers for at least one more year and estimates for 1986-2005more year and estimates for 1986-2005

Start investigation of private transfers and Start investigation of private transfers and asset reallocationsasset reallocations

Develop models for analysis and projection Develop models for analysis and projection of pension system variables, health and of pension system variables, health and other sectorsother sectors