Suppose that as the ratio of the working population to the retired population continues to fall, the voters approve a change in the way Social Security benefits are calculated—

a way that effectively reduces every retired person’s benefits by half. This change affects all those in the population, no matter what their age or current retirement status, and it is accompanied by a 50 percent reduction in payroll taxes. What would be the labor supply effects on those workers who are very close to the typical age of retirement (62 to 65)? What would be the labor supply effects on those workers just beginning their careers (workers in their twenties, for example)?