IBE316-14 - IBE 316 Economic Policy Stiglitz: Economics of...

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IBE 316 Economic Policy Stiglitz: Economics of the Public Sector Chapter 14: Social Insurance Keisuke OTSU Sophia University FLA Spring 2008 OTSU (Sophia University FLA) IBE 316 Spring 2008 1 / 17
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Review Defense expenditure should be made at MC=MB The US defense strategy earlier focused on deterrence during the cold war but recently is focussing on defense conversion spill-over e/ect upon the non-defense commercial sector OTSU (Sophia University FLA) IBE 316 Spring 2008 2 ± 17
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Overview Focus Questions What is social insurance, and why does government provide it? why do they seem so hard to remedy? What are major inequities and ine¢ ciencies associated with the design of the social security system, and how might they be remedied? OTSU (Sophia University FLA) IBE 316 Spring 2008 3 / 17
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Overview Social insurance and welfare expenditures is more than 1/3 of US government budget Social security: provides basic standard of living to the aged, the disabled and their survivors (OASDI, National Pension System) Social insurance programs provide insurance and redistribute income insurance: the participant is insured against risk (age, unemployment, health etc.) redistribution: the amount paid to the insured is not the same as what he put in OTSU (Sophia University FLA) IBE 316 Spring 2008 4 / 17
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The Social Security System Pay-as-you-go: payroll taxes of those working today pay for the funded systems)
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This note was uploaded on 10/22/2011 for the course ECON 316 taught by Professor Keisukeotsu during the Spring '08 term at Sophia University.

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IBE316-14 - IBE 316 Economic Policy Stiglitz: Economics of...

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