Autori
Aaberge, Rolf
Colombino, Ugo
Wennemo, Tom
Holmoy, Erling
Strom, Birger

Titolo
Population ageing and fiscal sustainability: An integrated micro-macro analysis of required tax changes
Periodico
CHILD. Working papers
Anno: 2004 - Fascicolo: 6 - Pagina iniziale: 1 - Pagina finale: 52

Most studies on the economic consequences of ageing rely on Computable Generl Equilibrium (CGE) models that account far feedback mechanisms through changes in relative prices, tax bases etc. However, since individual labour supply behaviour is considered to be a key element in CGE analyses of fiscal sustainability problems, the results of these analyses may depend crucially on how the labour supply behaviour is modelled. The current practice of combining a simplified representation of the tax and transfer system with the labour supply behaviour of a few representative agents may render a misleading description of incentives and revenue effects. The purpose of this paper is to demonstrate the importance of using an alternative strategy by integrating a detailed microeconometric model of labour supply, that is sufficiently flexible to capture a large variety of labour supply responses, with a large-scale CGE mode!. The integrated micro-macro CGE model is employed to explore how endogenous household labour supply behaviour affects and interacts with sustainability problems in Norway. The empirical results suggest that the required increase in the future tax burden is less dramatic when the analysis allows far a flexible representation of the labour supply behaviour. Moreover, by replacing the current progressive tax system with a flat tax system it is found that the pressure on future public finances is significantly reduced.



Testo completo: http://www.de.unito.it/web/member/segreteria/WP/Child/2004/6_WP_Child.pdf

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