Aging, Taxes and Pensions in Switzerland

Item Type Monograph (Working Paper)

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 which merely adjusts labor taxes and contribution rates to balance budgets, would be very costly. Total labor taxes would rise by 21 percentage points and per capita income would fall by roughly 20%. 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%. The present rules of deferred taxation of pension income support social security and labor market reform
by shifting tax revenue to the future when it is needed most in an aging society.

Authors Keuschnigg, Christian
Language English
Subjects economics
HSG Classification contribution to scientific community
HSG Profile Area SEPS - Economic Policy
Date 22 November 2016
Place of Publication St. Gallen
Number of Pages 37
References “Aging, Taxes and Pensions in Switzerland”, in: Robert Holzmann and John Piggott (eds.), The Taxation of Pensions, MIT Press, 2017, forthcoming.
Depositing User Dr. Mirela Keuschnigg
Date Deposited 23 Nov 2016 16:44
Last Modified 05 Jun 2020 00:24



Download (341kB) | Preview


Keuschnigg, Christian: Aging, Taxes and Pensions in Switzerland. , 2016,

Edit item Edit item