Suppose a pay-as-you-go social security system where social security is funded by a proportional tax on the consumption of the young. That is, the tax collected by the government is sc, where s is the tax rate and c is consumption of the young. Retirement benefits are given out as a fixed amount b to each old consumer. Can social security work to improve welfare for everyone under these conditions? Use diagrams to answer this question.
Â
Already registered? Login
Not Account? Sign up
Enter your email address to reset your password
Back to Login? Click here