Economics Research International

Research Article

What Are the Economic and Labour Market Effects of an Income Tax Reduction Targeted at Older Workers?

Table 2

Behavioural and public policy parameters.
ParameterNotationValue
Consumer preferences
Intertemporal elasticity of substitution 0.90
Intratemporal elasticity of substitution 0.80
Production technology
Production share of physical capital 0.30
Elasticity of substitution for labour demand 1.50
Depreciation rate of physical capital 0.05 (per year)
Interest rate 0.04 (per year)
Human capital technology
Elasticity of time input 0.70
Elasticity of public spending input 0.18
Public policy
CPP/QPP replacement rate 0.20
RPP replacement rate 0.02–0.14
Government expenditures/GDP0.37
Earned income tax rate 0.31
Capital income tax rate 0.38
Consumption tax rate 0.10