What do we give to the next generation? Do we transfer wealth and human capital to our children, or do we saddle them with debt and obligations to support us in our old age? Standard Generational Accounts (GA) calculate the net present value of public sector taxes and benefits. Full Generational Accounts (FGA) add to this the present value of expected private transfers received over a lifetime, including parental costs of childrearing, bequests, and inter vivos transfers. We introduce three versions of FGA. Using data from National Transfer Accounts (NTA), we calculate FGAs for the United States, where public transfers to children and the elderly are important, and for Taiwan, where the family plays a larger role in both. We decompose the FGA into public and private components, and into human capital investments (health, education), bequests, and other consumption. FGAs indicate substantial transfers to the generation born in 2010.
Published in a peer-reviewed journal of the Population Council. Ronald Lee is Professor of the Graduate School in Demography and Economics, University of California at Berkeley. David McCarthy is Assistant Professor, Department of Insurance, Legal Studies and Real Estate, Terry College of Business, University of Georgia. James Sefton is Professor of Economics, Imperial College Business School, Imperial College, London. Jože Sambt is Associate Professor, Academic Unit for Mathematics, Statistics and Operations Research, Faculty of Economics, University of Ljubljana.