Aging, Taxes and Pensions in Switzerland
35 Pages Posted: 23 Feb 2016
Date Written: January 20, 2016
The gains in life expectancy are expected to double the dependency ratio and increase population by 10% in Switzerland until 2050. To quantify the effects on pensions, taxes and social contributions, we use an overlapping generations model with five margins of labor supply: labor market participation, hours worked, job search, retirement, and on-the-job training. A passive fiscal strategy would be very costly. A comprehensive reform, including an increase in the effective retirement age to 68 years, may limit the tax increases to 4 percentage points of value added tax and reduce the decline of per capita income to less than 6%.
Keywords: aging, pensions, taxation, labor market effects, growth
JEL Classification: D580, D910, H550, J260, J640
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