If older workers have a tax elasticity of labor supply


If older workers have a tax elasticity of labor supply equal to 0.20, by how much will their work activity decline when they reach the Social Security earnings test limit? (Recall that the Social Security earnings test limit is 50 percent. Assume explicit taxes of 30 percent below that limit, i.e. 20%)

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Macroeconomics: If older workers have a tax elasticity of labor supply
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