Negative income tax and is akin to several programs run

Assignment Help Business Economics

Reference no: EM13795894

Consider your decision about how many hours to work.

a. Draw your budget constraint assuming that you pay no taxes (and receive no subsidies) on your income. On the same diagram, draw another budget constraint assuming that you receive a 20 percent subsidy (that is, for every dollar you receive in labor market earnings, the government gives you 20 cents). This is a negative income tax, and is akin to several programs run at the state and federal levels to combat poverty.

b. Show how the negative tax (i.e. subsidy) might lead to more hours of work, fewer hours, or the same number of hours. Explain. In your explanation (and using graphs), describe (and show) the substitution and income effects.

Reference no: EM13795894

Questions Cloud

Statement is true about money supply and reserve ratio : If the USA experiences an economic boom relative to its trading partners, then: If China , a key trading partner of the USA, expericnes a recession, then. Suppose the Government of the USA decided to increases it's spending over next one year. How wi..

Model of educational attainment better explains these facts : Consider the following facts. After the age of 25, persons with college degrees earn more than persons with no education beyond their high school degrees, ceteris paribus. Moreover, persons with high school degrees earn the same as persons who have h..

What happens to the signalling value of a persons education : In the typical signaling model, it is assumed that the costs of acquiring an education are higher for low-ability than for high-ability workers. Suppose that the government steps in and subsidizes low-ability workers for the higher costs they incur i..

Negative income tax and is akin to several programs run : Draw your budget constraint assuming that you pay no taxes (and receive no subsidies) on your income. On the same diagram, draw another budget constraint assuming that you receive a 20 percent subsidy (that is, for every dollar you receive in labor m..

The marginal revenue product of labor for electronics firm : The marginal revenue product of labor for an electronics firm is MRPL = 50 - L, where L = the number of workers. If the wage of electronics workers is $20 per worker, then how many workers will the firm hire?

What category pf civil litigation constituted : What category pf civil litigation constituted the highest percentage of lawsuit in 1980? Which category grew the most? Which category basically fell to zero? Personal injury, tax, condemnation, accounts / contracts / notes, reciprocals / urea, divorc..

What are the goals-objectives of judges : What are the goals/objectives of judges (what do they maximize)? Filing fees: for the marginal case, the one that may or may not be filed the filing cost should equalt what?

Difference-in-difference estimator of effect of job training : Suppose that between 2003 and 2007, one group of individuals (Group 1) received job training while another otherwise similar group (Group 2) did not. Suppose that the average earnings of the first group went from $40,000 per year to $55,000 per year,..

User Account

All Pages