Population Aging, Social Security and Fiscal Limits
Thu, 09 Mar 2017 09:13:00 GMT
Economics Research Group Seminar
Speaker: Dr. Vito Polito – University of Bath
Wed, 15th March 2017, 13:15, BSG/28
All staff and students welcome
Population Aging, Social Security and Fiscal Limits
We study the sustainability of social security systems for older people using a life-cycle model in which distortionary taxation sets an upper limit to the real value of tax revenues. This limit implies an endogenous threshold dependency ratio, i.e. a point in the cross-section distribution of the population beyond which tax revenues can no longer sustain the planned level of transfers to retirees. We quantify the threshold using a computable life-cycle model calibrated on the United States and on 14 European countries which have dependency ratios among the highest in the world. We examine the effects on the threshold and the welfare implications of alternative policies designed to improve the sustainability of the social security systems. New tax data on dynamic Laffer effects are provided.
