Question

Presently, there is a minimum and maximum social security benefit paid to retirees. between these two bounds, a retiree's benefit level depends on how much she contributed to the system over her work life. suppose social security was changed so that everyone aged 65 years or older was paid $12,000 per year regardless of how much she earned over her working life or whether she continued to work after the age of 65. how would this likely affect hours worked of retirees? [hint: you should consider income and substitution effects.]

Answer 1

I suppose this decision that it would be fair in some ways but not in others. Generally each individual has put in different amounts throughout there work life. To place all retirees in the same bracket would downplay the individuals that naturally put in more than others, and the total opposite effect for those who put less in. This would have a dramatic effect on retirees because a minimum work ethic would become the average.