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Growth and Welfare Distribution in an Ageing Society: an Applied General Equilibrium Analysis for the Netherlands

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Abstract

This paper studies the effects of the imminent ageing of the population on economic growth and the distribution of welfare in the Netherlands. It shows that with the current system of social security ageing leads to a substantial increase of the tax burden and an estimated welfare loss for future generations of approximately 4% of lifetime wealth. It discusses the effect of reform measures in the pay-as-you-go social security system. It shows that a cut in PAYG pensions is efficiency-improving, but hurts the lower income groups of current generations. This effect can be ameliorated by a debt-financed cut in indirect taxes.

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  1. D. Peter Broer
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Broer, D.P. Growth and Welfare Distribution in an Ageing Society: an Applied General Equilibrium Analysis for the Netherlands. De Economist 149, 53–79 (2001). https://doi.org/10.1023/A:1004107731636

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