The Social Security system affects the demand curve for labor because:
A)it lowers savings which translates to a lower capital stock.
B)it promotes capital accumulation.
C)it increases the productivity of the workers.
D)it increases overall investment in a nation.

Question

Quizplus · Accepted Answer

The Social Security system lowers savings by increasing mandatory contributions to the fund for retirement, disability, and survivor benefits. This reduction in savings leads to a lower capital stock, which can result in a decrease in labor demand. When there is less capital available, businesses may not be able to hire as many workers or invest in the latest technology and infrastructure needed to sustain growth.

The Social Security System Affects the Demand Curve for Labor