Effects of Social Security Programs on Wages and Working Hours

Document Type:Thesis

Subject Area:Economics

Document 1

Social security is built on the concept that the society in which one lives should help him/her develop and make out the best out of the advantages which are offered to them by their country. Social security may also be used to refer an organization’s action programs meant to promoting population’s welfare by proving assistance measures guaranteeing access to enough resources and basic needs for vulnerable segment of the population such as children and the elderly (Miller, Social security, 2013). Wages on the other hand refers to the earnings or payment offered to a person after he/she does some task or job. In this case, it is important to note that wages are received as the product of the number of hours worked by pay rate per hour (Rogers, 2013).

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In this review, the main objective is to show the relationship between social security, wages and working hours and how social security affects wages and working hours. The earnings are also capped at a given range above which additional wages do not add to one’s benefit but are subjected to social security portion for catering for the old and disabled in the country (States U. , An Act to Amend Title XI of the Social Security Act to Reauthorize for 1 Year the Work Incentives Planning and Assistance Program and the Protection and Advocacy for Beneficiaries of Social Security Program. The average monthly wage is calculated using the adjusted, capped earnings. Different rules may apply if one receives social security benefits for the disabled or supplemental security income payments and for those working abroad.

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Work is presumably a long term plan which is a limitation to retired-worker worker beneficiaries’ earnings and this applies to those aged between 62 and 69 which makes them to make life adjustments concerning their work activities like relocating planned work periods. Although older persons’ participation in the labor-force may increase in short run, the overall effect remains uncertain in the long run. Secondly, adjustments may come in through changes in number of working hours of the beneficiaries who do not wish to change jobs. In cases where the worker can alter his/her number of working hours, the estimated change in working hours depends on earning levels (JAcobs, 2011). By so doing, beneficiaries with whose earnings are below exempt amount will have very little effect on labor supply.

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These workers’ benefits will be received in full with current rules’ penalties. In some cases where individuals intend to work during retirement years might decide to retire earlier since their retirement jobs would be able to generate them more income without benefits loss (States S. S. Mostly, this involves leaving the full-time job and adopting the part-time employment which implies a reduction in labor supply. The decisions to participate in the long run may have an effect of tests’ elimination on labor supply through job changes which remains theoretically ambiguous in this case. Although most retirement test’s elimination mostly concentrates on workers nearing their end of working period, it could also induce young workers to change their working hours (Yager & Yager, 2015).

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