Using Markov Chains in the Social Security System

Submitted article is primarily focused on Markov chains and their possible application in practice. They represent a calculation of the likely progress of a certain event. In practical terms these are insurance events such as job loss, childbirth, or illness. All these events have a common characteristic, they have an equal probability at any point in time. It is necessary for insurance companies to know what the probabilities of transition are. Suitable mathematical tools are therefore homogeneous Markov chains. This article is investigating the application of absorption chains and interprets results using a particular situation. We pay attention to the Markov processes, because software ability to work with continuous models, therefore we consider the changes of system state in arbitrary time. Microsoft Office Excel was used to provide the calculations.