Essay on public finance and policy solution gruber

Solutions and Activities to CHAPTER 13 SOCIAL SECURITY Questions and Problems 1. The government of Westlovakia has just reformed its social security system. This reform changed two aspects of the system: (1) It abolished its actuarial reduction for early retirement, and (2) it reduced the payroll tax by half for workers who continued to work beyond the early retirement age. Would the average retirement age for Weslovakian workers increase or decrease in response to these two changes, or can you tell? Explain your answer. The first policy change, abolishing the actuarial reduction, would tend to lower the average retirement age. The actuarial reduction is intended to make workers approximately indifferent between†¦show more content†¦This offset may not be huge, though. The highest-earning workers would not increase their benefits by very much due to the redistributive nature of the calculations. Low-wage earners who have zero or very-low-wage years among the 40 would have a lower average on which to base the benefit calculation. In addition, by including 5 more years, people who did not delay retirement would have an even lower calculated benefit: their lifetime average would include those low-wage summer or entry-level jobs. 4. Suppose the Social Security payroll tax was increased today to 16.4% in order to solve the 75-year fiscal imbalance in the program. Explain the effect of this change on the value of the Social Security program for persons of different ages, earning levels, and sexes. An increase in the payroll tax would reduce the value of Social Security for younger workers relative to older workers. Older workers would benefit from having a more secure plan, and they wouldn’t have to pay in at the higher rate for very long. Younger workers would have to pay the higher rate over many more years, and their benefit calculation would not increase (because the increase in taxes is meant to keep the current system solvent, not to increase benefits). The very-highest-earning workers would not be harmed as much as lower-earning workers because the payroll tax is not imposed on earnings above $87,900 (currently); however, theirShow MoreRelatedMedicare : A Federally Administered Health Insurance Program1423 Words   |  6 Pagescoverage for the elderly that were a part of the high risk category; this left them very vulnerable against the high costs of being ill (Staff of the Office of Program Evaluation and Planning). According to the text book â€Å"Public Finance and Public Policy† by Jonathan Gruber, â€Å"there is surprisingly little evidence that the Medicare program actually improves the health of the elderly.†(472) This means that despite covering more than 49 million people in the United States as of 2014, the programRead MorePolicy Brief : Fracking Illinois1482 Words   |  6 Pages POLICY BRIEF: FRACKING ILLINOIS Brandon Bordenkircher OVERVIEW When you woke up today chances are you turned on a light, used the stove, drove a car, or charged your cell phone. The energy used to power those devices was powered by hydrocarbons like natural gas or oil. Natural gas and oil are accessed by drilling, but drilling can t always reach all the potential hydrocarbons. 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It also includes the study of the determinants of demand for health itself, global public health problems, and the nonmedical inputs into health, such as a decent living standard, education, physical and social environment, and personal lifestyle choices, to the extent that they are exogenous (e. g., independent of ones health status)Read MoreThe Cause of Globalization18688 Words   |  75 PagesCAUSES OF GLOBALIZATION COMPARATIVE POLITICAL STUDIES / August-September 2000 The most important causes of globalization differ among the three major components of international market integration: trade, multinational production, and international finance. The information technology revolution has made it very difficult for governments to control cross-border capital movements, even if they have political incentives to do so. Governments can still restrict the multinationalization of production, butRead MoreSelected Topics24764 Words   |  100 Pagesexplained in the following step. Initially, this procedure involves choosing the relevant variables that individuals are must likely to use in forming expectations about monetary policy. These variables are used to estimate the anticipated portion of policy actions while the residuals represent the unanticipated portion of the policy actions. In other words, anticipated variables based on fitted values whilst unanticipated ones related with the residuals. To separate these variables into the anticipatedRead MoreA Financial Perspective on Mergers and Acquisitions and the Economy19349 Words   |  78 Pageshave assumed that the deals with no announced prices were on average equal to 20 percent of the size of the announced transactions and carried the same average premium. *Professor of Business Administration, Harvard Business School, and Professor of Finance and Business Administration, University of Rochester. The author is grateful for the research assistance of Michael Stevenson and the helpful comments by Sidney Davidson, Harry DeAngelo, Jay Light, Robert Kaplan, Nancy Macmillan, Kevin Murphy, Susan