3rd MeetingMacroeconomic Aspects of Intergenerational TransfersCountry Report: Indonesia

HonoluluJanuary 2006

MalikiTurro WongkarenSuahasil Nazara

Organization

Current AchievementsMethodological IssuesPreliminary ResultsNext Steps

Current Achievement

One year (1996) estimation of complete NTA (preliminary)

Eleven year (1993 – 2003) estimation of private consumption

Time series data collection

Data Availability

Private Account

Socio-economic survey data (Susenas) 1993 – 2003, and 2004 (partial)

Labor force survey data (Sakernas)

Public Account

Government Budget figures from the 1880`s, 1960, and 1969

National Account, consumption approach and value added approach, from 1960

Notes onPrivate Account

Estimation

Private Asset Allocation

No adequate data on private assets on an annual basis

Private assets data are more complete for some survey years

Alternative survey (SKIRT – Survey on Household Savings and Investments 1992, 1994, 1996, 1997)

Bequests Estimation

Socio-economic Survey （ Susenas) data from 1993 – 2003 used to calculate headship rate

Problems: wealth or assets data only for 1993, 1996, 1999, 2002

Requires new assumption to fit with the available data

Re-define household head (?) – to smooth the estimation

Adjustment to National Level

Private consumption is adjusted to match private consumption at the National Account

Earnings and self-employment earnings do not have national aggregates Indonesian National Account is only based on

consumption and value added approaches, Income approach is not available Preliminary estimation of national income from Central

Statistic Bureau (BPS) working paper is used to adjust private labor income to match national level aggregates (may be an underestimation)

IndonesiaIncome Account Estimation: Wage and Mixed Income

Components

0

50

100

150

200

250

300

350

400

450

500

Fiscal Year

Trillio

n R

upia

h n

Wages

Mixed Income

Source: Statistical Paper BPS #14: Towards National Income for Indonesia, KusmadiSaleh and Yahya Jammal (2002)

Time Series Data

At least 11 points of cross section data on private consumption

Only three-year cycle of labor income: Wage Self-employed income Un-earned income Assets

Notes Public Account Estimation

Public Health ProgramProgram Annual Budget

(Million Rupiah)

Allocation Method

1995/1996 1996/1997

Health Support and Hospital Referral

51.4 148 Major hospital utilization profile

Civil Education 43 43 Per-capita profile

Health Support 97.6 121 Supporting hospital (puskesmas) utilization profile

Disease Control and Prevention

104.6 128 Communicable disease incident profile

Nutrition Improvement Program

15.5 17.5 Survival Rate of child and reproductive age women

Subsidy and Health Support

369.5 564.1 Per-capita rural

Others 47.6 42.4 Per-capita

Age Profile of Hospitalization and Puskesmas Utilization 1996

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

0.4

0.450 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96

In-patient Out-patient Puskesmas

.. .

Age Profile of Public Health Consumption 1996

0

5

10

15

20

25

30

350 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72

Pop

ula

tion A

dju

sted,

Mill

ion R

upia

h

0

5

10

15

20

25

Per-

capit

a m

onth

ly, Thousa

nd R

up

iah

Population Adjusted Per-capita

Public Asset Allocation

Capital asset data from BPS unpublished estimation (Hananto Sigit (2002))

Assumptions: depreciation rate 3% base year 1975

Public Capital Asset EstimationIndonesia

0

1

1

2

2

3

3

4

End of Year

Tri

llio

n R

upia

h m

Hananto Sigit (2002) *

Depreciation Rate 3%***

Hananto Sigit (2002) **

Notes: * 1993 Price with 3% depreciation assumption, based year 1975 ** 1996 Price *** Direct calculation, nominal value with 3% depreciation assumption

Time Series Data

Education, health, and other public consumption Public data is available from 1960 for central

government Government Expenditure of Netherlands East

Indies from 1821 – 1940 Estimation of National Account of Netherlands

East Indies by International Institute of Social History

Decentralization started in 2000/2001

Government Expenditure in the Netherland East Indies

0

200

400

600

800

1,000

1,2001

84

8

18

53

18

58

18

63

18

68

18

73

18

78

18

83

18

88

18

93

18

98

19

03

19

08

19

13

19

18

19

23

19

28

19

33

19

38

Fl

10

00

00

0

n

Total Expenditure

Education

of w hich in the Netherlands

Source: International Institute of Social History 2005

Estimated Variables:Preliminary Results

Lifecycle Production and Consumption, Per-capita Indonesia 1996

0

50

100

150

200

250

3000 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88

Th

ou

san

d R

up

iah

Private and Public Consumption

Private Consumption

Production

Lifecycle of Production and Consumption, Per-capita, Relative to age 20 - 60, Indonesia 1996, 1999, 2002

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88

Relative to production and consumption of 20 – 60 age groups

199619992002

1999

0

2000

4000

6000

8000

10000

12000

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 20020

50

100

150

200

250

300

Exchange Rate,1 USD = Unit Rupiah

Consumer Price Index

-50

0

50

100

150

200

250

300

350

400

450

1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69 73 77 81 85 89 93 97

earning 99

labor income 99

earning 96

labor income 96

Per-capita Labor Income and Earnings, Nominal Value, ThousandRupiah, Indonesia 1996 and 1999

0

50

100

150

200

250

300

1999

2002

Lifecycle Deficit Age Profile (without Public Consumption), Nominal Value, Trillion Rupiah, Indonesia,

1993, 1996, 1999, & 2002

-10

-8

-6

-4

-2

0

2

4

6

8

10

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

2002 1999

1996 1993

Preliminary Estimates Lifecycle Deficit, Indonesia 1996, nominal value,

Billion Rupiah

0 – 19 20 - 29 30-49 50+

Lifecycle Deficit

130,362 29,958 -46,764 6,653

Consumption 142,952 91,278 110,540 56,440

Public 28,780 7,509 8,158 4,707

Private 114,172 83,769 102,382 51,732

Less: Labor Income

12,590 61,320 157,304 49,787

Reallocation

Private transfers is the main source for young age groups

Savings (as residuals) finance the deficit for elderly

Bequest are concentrates in the old age groups, from 60 age groups

-15

-10

-5

0

5

10

15

1 5 9 13 17 21 25 29 33 37 41 45 49 53 57 61 65 69

Component of Reallocation, Trillion Rupiah, Nominal Value, Indonesia, 1996

Asset Reallocation

Transfers

Saving as residuals

Lifecycle deficit

Private transfers

-6

-4

-2

0

2

4

6

8

101 4 7 10

13

16

19

22

25

28

31

34

37

40

43

46

49

52

55

58

61

64

67

70

73

76

Component of AllocationPrivate and Public Transfers, Trillion Rupiah, Nominal Value, Indonesia 1996

Private transfers

Public Transfers

Reallocations, Indonesia 1996, nominal value, Billion Rupiah

0 – 19 20 - 29 30-49 50+

Reallocations 130,362 29,958 -46,764 6,653

Asset Reallocation -84,131 -33,039 -58,365 -18,568

Public -26,071 -16,708 -143,084 -50,288

Private -58,060 -16,331 84,243 31,720

Transfers

Public 4,999 -254 -2,282 -2,468

Private 112,467 29,442 -48,810 -49,779

Intervivos 111,839 24,901 -67,568 -23,692

Bequest 628 5,541 20,758 -26,087

Next Steps ….

Fixing BequestsForecast consumption and productionPublic Estimations

Capitals Consumptions

Estimations old previous years….

Survival Rate of Household HeadIndonesia 1993 - 2002

0.9

0.92

0.94

0.96

0.98

1

25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73

Age

1993 1996 1999 2002

Individual Monthly Education Expenditure Estimation by cohort (1958 - 2000), Thousand Rupiah, Indonesia

0

2

4

6

8

10

12

14

16

18

20

Age

Sources: Indonesia Socio-economic Survey Data 1993 - 2003

Cohort 1986

Cohort 1976

Individual Monthly Education Expenditure Estimation by cohort (1958 - 2000), Thousand Rupiah, Indonesia

0

5

10

15

20

25

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34

Age

Note: Assuming inflation rate = 10%

dotted line is estimation data

Cohort 1986

Cohort 1976

0

2

4

6

8

10

12

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

Per-capita Monthly Private Health Expenditures,Nominal Value, Thousand Rupiah,Indonesia 1993 - 2003

2001

2003

2000

2002

Target This Year

NTA table – with more accurate estimations of each component

Additional years..