Aging and the Financing of Social Security in Switzerland

Item Type Journal paper

Demographic projections forecast a doubling of the dependency ratio until 2050 as well as an increase of 10% in population due to longer life expectancy in Switzerland. To quantify the effects on social security and public finances, we use a computational overlapping generations model with five margins of labor supply: labor market participation, hours worked, job search, retirement, and on-the-job training. Starting with a passive fiscal strategy, we find that aging might reduce per capita income by 20 percent and necessitate a long-run increase of wage taxes and social security contributions by 21 percentage points. A comprehensive reform package, including an increase in the effective retirement age to 68 years and several other measures, 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%.

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Authors Keuschnigg, Christian; Keuschnigg, Mirela & Jaag, Christian
Journal or Publication Title Swiss Journal of Economics and Statistics
Language English
Keywords Aging, social security, retirement, human capital, unemployment.
Subjects economics
HSG Classification contribution to scientific community
Refereed Yes
Date 2 June 2011
Publisher Peter Lang
Place of Publication Bern
Volume 147
Number 2
Page Range 181-231
Number of Pages 51
ISSN 0303-9692
Depositing User Prof. Dr. Christian Keuschnigg
Date Deposited 01 Sep 2009 09:05
Last Modified 23 Aug 2016 11:06



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Keuschnigg, Christian; Keuschnigg, Mirela & Jaag, Christian (2011) Aging and the Financing of Social Security in Switzerland. Swiss Journal of Economics and Statistics, 147 (2). 181-231. ISSN 0303-9692

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