Consider an income guarantee program with an income guarantee of $3,000 and a benefit reduction rate of 50%. A person can work up to 2.000 hours per year at $6 per hour. Mia, Lucas, Thomas, and Deborah work for 100, 333 %, 400, and 600 hours, respectively, under this program. The government is considering altering the program to improve work incentives. Its proposal has two pieces. First, it will lower the guarantee to $2.000. Second, it will not reduce benefits for the first $3,000 earned by the workers. After this, it will reduce benefits at a reduction rate of 50%. a. Draw the budget constraint facing any worker under the original program. Explain. b. Draw the budget constraint facing any worker under the proposed new program. Explain. I c. Which of the four workers do you expect to work more under the new program? Who do you expect to work less? Are there any workers for whom you cannot tell if they wilI work more or less? Explain

Consider an income guarantee program with an income guarantee of $3,000 and a benefit reduction rate of 50%. A person can work up to 2.000 hours per year at $6 per hour. Mia, Lucas, Thomas, and Deborah work for 100, 333 %, 400, and 600 hours, respectively, under this program. The government is considering altering the program to improve work incentives. Its proposal has two pieces. First, it will lower the guarantee to $2.000. Second, it will not reduce benefits for the first $3,000 earned by the workers. After this, it will reduce benefits at a reduction rate of 50%. a. Draw the budget constraint facing any worker under the original program. Explain. b. Draw the budget constraint facing any worker under the proposed new program. Explain. I c. Which of the four workers do you expect to work more under the new program? Who do you expect to work less? Are there any workers for whom you cannot tell if they wilI work more or less? Explain

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.3P

See similar textbooks

Similar questions

Consider a working mother who is guaranteed an income of $18,000 per year from a combination of working and government assistance. In order to earn $20,000 herself, through work, how many hours would she need to work? $25,000 $20,000 $18,000 $16,000 $15,000 $10,000 $5,000 500 1,000 1,500 2,000 2,500 + Leisure (hours) Labor (hours) Select the correct answer below: 500 labor hours O O labor hours 2500 labor hours O 1000 labor hours Income
John has gross biweekly earnings of $743.61. By claiming 1 more withholding allowance, John would have $19 more in his take home pay. How many withholding allowances does John currently claim?
Is there a role for government in reducing the negativeeffects of dual employment
Please write a different answer there is an answer available for this on Bartleby already and tutors are copying and pasting that answer. but I need a new working from you 1. Consider an individual aged 64 who is eligible to collect full social security (public pension) benefits of $6,000 for a year. They have no other income but can work at a weekly wage rate of $600 for a maximum of 52 weeks. Receipt of benefits from the social security program is retirement tested. Specifically, the individual can earn up to $9,000 in annual wage income without a reduction in benefits; however, after $9,000 of earnings, benefits are reduced by 50% for every dollar earned, until the benefits are exhausted. a) Carefully draw and label the budget constraint for this individual. b) Suppose previously there was a retirement test, and then the test is eliminated, i.e., the individual now is allowed to keep all benefits, irrespective of their labour earnings. How would this affect the individual's…
See the income and benefits information for a wage earner in an antipoverty program with a phased-out approach in the table below. How much more could one earn in total income if he chose to work 500 additional hours beyond whatever amount he currently works? Table 1: The Labor-Leisure Tradeoff with Assistance Reduced by 50 Cents for Every Dollar Earned Amount Worked Total Government Total (hours) Earnings Support Income $18,000 $20,000 $18,000 500 $4,000 $16,000 1,000 $8,000 $14,000 $22,000 1,500 $12,000 $12,000 $24,000 2,000 $16,000 $10,000 $26,000 2,500 $20,000 $8,000 $28,000 Select the correct answer below: O $0 O $2, 000 $4, 000 O $18, 000
Suppose your MRS=3C/5L. You have $4,000 in non-wage income and there are 120 Total possible working hours in a week. What is your reservations wage?
Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. 1. The benefit of EITC will disappear at how many hours of leisure? (use just numbers) 2. When the EITC disappears how much does the worker get to consume (do not use $ sign)
Suppose a single parent can work up to 16 hours per day at a wage rate of$10 per hour. Various income maintenance programs have been developed to assurea minimum level of income for low-income families. Aid to Families withDependent Children (AFDC) was established with the Social SecurityAct of 1935. The family was given an income subsidy depending on family size. Under this program, the family’s benefi t was reduced by $1 forevery dollar earned. Suppose the maximum daily subsidy for the singleparent described in this problem is $40.a. Draw the daily budget constraint without program participation forthe single parent described in this problem.b. On the same graph, draw the daily budget constraint under AFDC forthe single parent described in this problem.c. What effect does this program have on the incentive to work? Explain.
Income $560 $320 B 60 40 0 Work T Suppose this worker's union negotiates an increase in the straight-time wage from $8 to $9.33 per hour with no bonus for overtime. This plan would allow earnings of $560 at 60 hours per week. Assuming this worker can freely choose the number of hours worked, he will choose to work more than 60 hours per week. 60 hours per week. more than 60 hours per week if the income effect dominates; less otherwise. fewer than 60 hours per week. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
A worker's average indexed monthly earnings (AIME) will be their Social Security benefit at retirement. True False
Suppose the government introduced a child benefit equal to $7000 per year. For every dollar earned by the family, the benefit amount is reduced by 7 cents. At what level of earnings will the family no longer receive a child benefit?
The following figure shows the relationship between employment and monthly salary in the periods 1968 to 1984. Copytight o Moraw Educaton. Permsson required for reproduction or dispiay. Employment Monthly Salary ($) 250,000 4,500 230,000 4,000 210,000 190,000 3,500 170,000 150,000 3,000 130,000 2,500 110,000 Wage 90,000 2,000 70,000 Employment 50,000 1,500 1968 1970 1972 1974 1976 1978 1980 1982 1984 Using the labour supply - labour demand model, how can you rationalize the comovement between employment and wage in the period 1968-1976 The labour demand curve shifts to the left There is no way to rationalize the data The labour demand curve shifts to the right The labour supply curve shifts to the right The labour supply curve shifts to the left