Labor market earnings, Suppose that a country has 20

Labor market earnings

Reference no: EM131023592

Suppose that a country has 20 million households. Ten million are poor households that each have labor market earnings of $20,000 per year, and 10 million are rich households that each have labor market earnings of $80,000 per year. If the government enacted a marginal tax of 10 percent on all labor market earnings above $20,000 and transferred this money to households earning $20,000, would the incomes of the poor rise by $6,000 per year? Explain.

Reference no: EM131023592

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