What effect would given policy have on work effort

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Reference no: EM131198997

Suppose that the government currently provides everyone with a guaranteed income of $12,000 per year, but this benefit level is reduced by $1 for each $1 of work income. The government is considering changing this policy such that the benefit level is reduced by $1 for every $2 of work income.

What effect would this policy have on work effort? Explain your answer.

Reference no: EM131198997

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