To this end, we apply an extension of the overlapping generations (OLG) model developed by Kudrna and Woodland (2011a, b), with the capacity to investigate changes in the taper rate and labour earnings exemptions. The simulation results indicate that further increases in the taper combined with lower income tax rates lead to higher per capita labour supply and assets, as well as to welfare gains in the long run, while labour earnings exemptions have largely positive e¤ects on average labour supply at older ages. Further increases in the taper are also shown to generate significant reductions in overall government spending on the age pension and, therefore, could be used as an alternative to increasing the age pension access age.
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