Research Article

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

Table 3

Impact of a 10% permanent reduction in earned income taxes for workers aged 60 and over on key macroeconomic indicators (percentage point difference relative to reference scenario).

201020142022203020422050

Real GDP per capita0.080.050.050.050.080.10
Labour supply/capita0.130.120.150.180.250.30
National savings−0.290.07−0.10−0.14−0.29−0.25
Capital stock/capita−0.05−0.13−0.19−0.32−0.42−0.47
Capital/labour ratio−0.19−0.28−0.38−0.57−0.79−0.93
Real wages−0.05−0.08−0.11−0.15−0.20−0.24
Earned income tax rate−0.13−0.13−0.13−0.13−0.13−0.14