Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192399 
Year of Publication: 
2005
Series/Report no.: 
Discussion Papers No. 417
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Ageing combined with generous welfare state schemes makes the present fiscal policy in Norway unsustainable, despite large government petroleum revenues. We estimate to what extent two suggested reforms of the public pension system improve fiscal sustainability and stimulate employment, two main objectives of the reforms. To this end we apply two large models iteratively: 1) a detailed dynamic micro simulation model to estimate government pension expenditures; 2) a large CGE-model to estimate general equilibrium effects on all tax bases and employment, i.e. macroeconomic effects. We find that the reform proposals have much larger effects than typically found for reforms of the tax and trade policy. Whereas maintaining the present system implies that the payroll tax rate must be increased from about 13 percent today to 25 percent in 2050, both proposals imply that taxes can be reduced from the present level in all years up to 2050. Most of this reduction can be attributed to higher employment.
Subjects: 
Population ageing
Fiscal sustainability
Pension reforms
Computable general equilibrium model
Dynamic micro simulation
JEL: 
H30
H55
H62
Document Type: 
Working Paper

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