Aging and the Financing of Social Security in Switzerland

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 social security and public finances, we use an overlapping generations model with five margins of labor supply: labor market participation, ho...

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Bibliographic Details
Published in:Schweizerische Zeitschrift für Volkswirtschaft und Statistik 2011-04, Vol.147 (2), p.181-231
Main Authors: Keuschnigg, Christian, Keuschnigg, Mirela, Jaag, Christian
Format: Article
Language:English
Subjects:
Aging
Dependency
Economics
Economics and Finance
Health care
human capital
Job training
Labor force participation
Labor market
Labor supply
Life expectancy
Population ageing
Retirement
Social security
Social security financing
Social welfare
Statistics
Switzerland
Taxation
unemployment
Welfare state
Working hours
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Summary: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 social security and public finances, 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 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%.
ISSN:2235-6282
0303-9692
2235-6282
DOI:10.1007/BF03399345