– In the private market, the low risks would be less likely than the high risks to purchase the insurance policy.
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Why Have Social Insurance?
• Other justifications
Chapter 9 – Social Insurance I: Social Security and Unemployment Insurance
Public Finance
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Aaron S. Yelowitz - Copyright 2003 © McGraw-Hill
Social Insurance Programs
Structure of Social Security: Basic Components
• Recipient’s family status
– For a single worker who retires at the normal retirement age, the monthly benefit equals PIA.
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Structure of Social Security: Basic Components
• Explicit transfers
– Supplemental Security Income (SSI) was enacted in 1972 and is administered by the Social Security Administration.
• Consider a person with a typical “ageearnings” profile, who starts work at age 22 and retires at 67, and therefore has 45 years of full-time work.
