Discuss a household facing a static labor supply problem

Reference no: EM133564433

Assignment:

The effect of employment subsidy programs. Consider a household facing a static labor supply problem. The household has a utility function given by: u(c) - v(h) = c1-σ 1-σ - θε 1 ε h(1 ε)/ε, where c represents consumption, h represents hours of work, and θ, ε > 0 are two constants. Suppose the government decides to introduce an earned income tax credit (EITC), which provides a subsidy to workers: For each hour of work, the worker earns w(1 τ ), where w is the hourly wage and τ is the proportional subsidy.

Reference no: EM133564433

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