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Consider a pay-as-you-go social security system where social security is funded by a proportional tax on...

Consider a pay-as-you-go social security system where social security is funded by a proportional tax on the age of the young (less before the age of 40, more after 40).

In other words, the tax collected by the government is sc, where s is the tax rate and c is the consumption of the young. Retirement benefits are provided as a fixed amount

b to each old consumer. Can social security improve lifetime wealth for everyone in this situation? Use diagrams in your answer.

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