Reviews the book "Computer Accounting Methods," by Gregory A. Cook, Barbara J. Wade and Clark C. Upton.

I. Introduction, 581. — II. Data, 583. — III. Effects of population change, 587. — IV. Causes of population change, 590. — V. Econometrics: testing and estimation, 594. — VI. The estimated model: comparative statics, 599. — VII. The estimated model: dynamics, 600. — VIII. Conclusions, 604. — Appendix: basic data series, 606.

It is feared that low fertility and older age distributions in the developed countries might cause lower life cycle consumption because of the increased pension and health cost burden. The theoretical literature on intergenerational transfers has addressed this question but has considered only the consumption of market goods and has made no serious empirical attempt to measure the theoretical concepts necessary to assess the problem. This paper develops a theoretical model of intergenerational transfers incorporating time use. With the aid of time budget and consumer expenditure surveys, empirical estimates of the age profiles of various types of time and goods consumption are presented, and we conclude that (1) the net direction of intergenerational transfers is from younger to older ages; (2) under the golden-rule assumption, these transfers largely constitute an externality to childbearing; and (3) they are not large enough to offset the capital dilution effect that would result from higher fertility and more rapid population growth.

The US population will age rapidly for several decades and then more slowly, with less aging than most rich nations. Health of the elderly has greatly improved, but disability stagnated after 2000. Retirement age reversed its decline in the mid-1990s and health status leaves ample room for increased elder labor supply. Many older people have inadequate retirement savings and face additional risks including uncertainty about both public and private pensions and health insurance. Population aging may cause a small decline in rates of return. The main problem is the impact of population aging on public programs for the elderly.

It is feared that low fertility and older age distributions in the developed countries might cause lower life cycle consumption because of the increased pension and health cost burden. The theoretical literature on intergenerational transfers has addressed this question but has considered only the consumption of market goods and has made no serious empirical attempt to measure the theoretical concepts necessary to assess the problem. This paper develops a theoretical model of intergenerational transfers incorporating time use. With the aid of time budget and consumer expenditure surveys, empirical estimates of the age profiles of various types of time and goods consumption are presented, and we conclude that (1) the net direction of intergenerational transfers is from younger to older ages; (2) under the golden-rule assumption, these transfers largely constitute an externality to childbearing; and (3) they are not large enough to offset the capital dilution effect that would result from higher fertility and more rapid population growth.

Population aging and rising health costs will cause dramatic increases in federal expenditures some decades from now (Lee et al., 1999). Rising immigration to the United States may help avert this future crisis by slowing population aging and helping to pay for Social Security and public health care. But many immigrants have low education and high fertility, so their net fiscal impact may be costly rather than beneficial. This paper revisits our earlier analysis of the fiscal impact of immigration (Lee and Miller, 1997), henceforth LM97, in light of higher projected rates of productivity growth, an unexpected increase in the effective federal income tax rate in recent years, and some revisions of the demographic projections. We will emphasize implications for Social Security, and address points raised by the recent literature (Holger Bonin et al., 1998; George Borjas, 1999; Alan Auerbach and Philip Oreopolis, 2000; Kjetil Storesletten, 2000).