Question
I need an answer to the following question. Do not copy-paste from Chegg as it is not what I need. Question: compute the benefit that
I need an answer to the following question. Do not copy-paste from Chegg as it is not what I need.
Question: compute the benefit that a retiree of the first generation can get in period 2.
Suppose people can live in two periods. In the first period people are young and they work. Each can earn $20,000, and the pay roll tax rate is 10%. In the second period, people are old and they retire. Retirees rely on social security benefits. The social security system is a combination of a funded pension and an unfunded plan. For the funded part, 50% of the payroll tax paid by young workers goes to investment, and the interest rate is 4%. People get the investment back when they retire. For the unfunded part, 50% the payroll tax collected from young workers are paid to retirees immediately. In each period, the number of people grows by 5%, and the wage grows by 5%. In period 1 there are 100 young workers (first generation). In period 2, the first generation can get benefits from the social security program. Question: compute the benefit that a retiree of the first generation can get in period 2.
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