Minneapolis Federal Reserve Bank economist Edward Prescott estimates the elasticity of the U.S. labor supply to be 3. Given this elasticity, what would be the impact of funding the Social Security program with tax increases on the number of hours worked and on the amount of taxes collected to fund Social Security? Because labor supply is elastic, raising the tax rate will the percent of hours worked by than the percent decrease in wages paid. That is, total income will and total revenue collected by taxes will . Social Security be financed by increasing tax rates.