Give two reasons why Social Security is compulsory for most workers.

Give two reasons why Social Security is compulsory for most workers.

What will be an ideal response?

 

ANSWER

Since the Social Security program redistributes resources as well as provides insurance, it makes sense that it is compulsory for two reasons. First, the redistributive nature of the program makes it a bad deal for high-income workers who would likely opt out of the system if they were able to. This is called the adverse selection problem. Second, the pay-as-you-go nature of the program requires a regular influx of new contributors, thus new workers need to be forced to enter into the system as it needs their contributions.

 

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