12 May WHAT DETERMINES BENEFITS RECEIVED FROM SOCIAL SECURITY?
Review 3Public Sector1. Discuss the funding of Social Security. What determines benefits received from Social Security? You do not need to know specific values, but you should have agood understanding of how these values vary with income.2. What demographic changes are occurring that will force changes in the SocialSecurity system?3. Consider a typical defined benefit pay-as-you-go retirement system.a. Who gains and who loses if we were to, at some point T, change from pay-as-yougo to a fully funded pension program?b. Explain one respect in which the Social Security program, as structured in theUnited States, redistributes income within a generation.c. Briefly describe the how social security wealth affects national savings.4. In 2006, monthly social security benefits rates are 90% for earnings of less than $656,32% for earnings between $656 and $3955, 15% for earnings between $3955 and$7900.a. Graph the social security benefits as a function of earnings.b. Calculate the monthly benefit for an individual earning $6,000 per year.c. Calculate the monthly benefit for an individual earning $30,000 per year.d. Calculate the monthly benefit for an individual earning $120,000 per year.5. In 2006, if you start collecting your social security benefits before your full retirementage, you benefits are reduced by $1 for every $2 in earnings once you have earnedmore than $12,000 for the year. Assume that 1) you have 2000 hours per year forwork or leisure, 2) you earn $40 per hour and 3) your annual social security paymentis $12000. Using all of the above information, graph your annual budget constraint.Be sure to label everything (hours, wages, earnings, kink points, etc.)!!!6. Many economists assert that Social Security pensions redistribute income from singleworkers to married worker with dependent spouses and from high income workers tolow-income workers. Explain.7. Under the tax law in effect in 1996 there is an earned income tax credit for low-wageworkers. There is no credit if no income is earned. The credit peaks at $3556 whenthe worker has earned $10,000 and is phased out completely if the worker earns morethan $28,450. For simplicity, assume that the worker faces no other taxes. Is itnecessarily so that the credit increases hours of work for all those who are eligible?Why or why not?8. In the diagram WH is the budget line resulting from labor market work. Describe thecharacteristics of the income transfer programs implicit in budget lines HBWâ,HBYW, and HBW. Explain each budget line (i.e. non-labor transfers and/or taxesinvolved). Compare the work incentives/disincentives for each budget line.WâIncomeWBYHHours9. An individual can earn $12 per hour and can work up to 160 hours per month. Drawthe budget constraints that show the monthly consumption-leisure trade-off under thefollowing three welfare programs:a. The government guarantees $500 per month in income and reduces that benefit by$1 for each $1 of labor incomeb. The government guarantees $500 per month in income and reduces that benefit by$1 for every $3 of labor income.c. The government guarantees $1000 per month in income and reduces that benefitby $1 for every $1 in labor income.d. Compare the work incentives and disincentives for each of the three programs10. Dana has a low wage: $10.00 per hour.a. Assuming that Dana has no non-earned income and has 16 hours per day foreither work or leisure, draw her daily budget line and an indifference curve.b.Suppose New Jersey enacts a welfare program such that people like Dana will beassured of some income, regardless of earnings. Suppose Dana receives $20.00per day from the state of NJ, with no strings attached. Redraw the budget line.What do you think will happen to Dana’s hours of work? Why?c. Now, suppose NJ enacts an additional restriction, such that Dana will lose 50cents of the support payment for each dollar earned. Re-draw the budget line,again, indicating the break-even amount. What do you suppose will happen tohours worked compared to B?d.Now, suppose that instead of losing 50 cents for each dollar earned, Dana willlose one dollar for each dollar earned. Re-draw the budget line, again. What doyou suppose the hours worked will be compared to a, b , and c? Why?11. Why are individuals always at least as well off with a cash welfare transfer as they arewith an equally sized in-kind transfer? Explain and show in a graph. Why, then, doesthe government provide in-kind transfers rather than only cash transfers.12. True, False, Uncertain. For all types of cash and in-kind benefits, an individual mustpass a means test and a categorical test. Explain and include definitions for a meanstest and a categorical test.13. Jackie spends her money on food and all other goods. Right now, she has an incomeof $1000 per month. Compare two alternative welfare programs in which she couldparticipate: program A would provide her a monthly check of $300 and program Bwould provide her with $300 a month in credits that can be spent only on food.a. Draw Jackieâs budget constraints in each of these two cases.b. Draw representative indifference curves that would reflect each of these threescenarios1 Jackie prefers program A to program B;2 Jackie is indifferent between the two programs.14. In each of the following situations, determine the impact on the number of individualsemployed, unemployed or not in the labor force, ceteris paribus.a. Chuck retires from his job and spends his retirement in Minnesota fishing.b. Janet retires from her job and spends her time as an uncompensated volunteer golfinstructor for the local park district.c. Rich, unable to find work, quits looking and goes to school full time.d. Patty drops out of graduate school and takes a full-time job.e. Ken closes his self-employed business and goes to school full time.f. Dave finishes college and takes a six-week vacation at a casino.g. Leslie finishes college and begins to look for a new job.h. Bruce, who was looking for work for over a year, accepts a job.15. Use the following information about Employment Country. Numbers are in millions.20012002Population223.6226.5Adult Population168.2169.5Number of Unemployed7.48.1Number of Employed105.2104.2a. What is the labor force in 2001 and 2002?b. What is the labor force participation rate in 2001 and 2002?c. What is the unemployment rate in 2001 and 2002?16. “Since people can always be induced to work hard with sufficient provision ofincentives, moral hazard due to unemployment insurance is not a problem.” Discuss.17. In New Jersey, the benefit replacement rate is 60% up to a maximum of $611 perweek. In order to be eligible for this benefit, a worker must have earned a minimumof $173 per week for at least 20 weeks. With the weekly benefit rate on the verticalaxis and the weekly wage on the horizontal axis, graph the unemployment benefits forNew Jersey.18. In January, you are hired to help the presidential administration set its agenda. Youare asked to review the Unemployment Insurance (UI) program, which currentlyreplaces approximately 45% of a workerâs wages for 26 weeks after she loses her job.President Xâs labor secretary shows you a table comparing the unemploymentdurations of individuals who receive UI and do not receive UI. This table revealsthat those who receive UI stay unemployed longer than those that do not receiveUI. He claims that this proves that UI causes longer unemployment durations.a. Is he correct? Why or why not? What other evidence could you bring to bear onthis question that might be more useful in gleaning the correct relationshipbetween UI generosity and unemployment durations?b. If UI causes longer unemployment durations, does this prove that the generosityof the program should be reduced? Why or why not?c. Consider two alternative reforms of the current UI system. The first is to perfectlyexperience rate firms, so that the taxes that firms pay are set exactly equal to thebenefits their workers receive (benefits remain at 45% of wages). The second is asystem of individual perfect experience rating – the government would loanindividuals 45% of their wages while unemployed, but they would have to paythem back when they get a new job.i. Contrast the effects of these alternative policies on unemployment durations andthe likelihood of worker layoffs.ii.Contrast the extent of insurance for workers provided by each of thesealternatives with the current system.19. Having done such a great job analyzing UI, you are now asked to help reform theDisability Insurance (DI) system, which provides benefits for the rest of your life foroff-the-job injuries which leave you unable to work. In particular, it is consideringtwo alternative reforms:Paying different DI benefits for different types of disabilities (e.g. you get 30% ofyour previous wage if you have disability type X and 50% if you have disabilitytype Y).Increasing the length of time people must have gone without working before theyare allowed to apply from 5 months to 12 months.a. Explain the rationale behind each proposal.b. Explain the downside of each proposal.c. If you recommend reform #1, how would you decide which type ofinjuries should get higher compensation and which type should get lo
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.