23 Jul WHICH OF THE THREE INDIVIDUALS DO YOU EXPECT TO WORK MORE UNDER THE NEW PROGRAM?
tested) program with an income guarantee of $5000 a Show more Consider an income guarantee (traditional meanstested) program with an income guarantee of $5000 and a phase out rate of 25%. This means that individuals always have at least $5000 in disposable income but lose 25 cents of the income guarantee for each $1 that they earn in the market. A person can work up to 5000 hours per year at $10 per hour. Bruno Damien and Raja work for 400 800 and 1500 hours respectively under this program. The government is considering altering the program to improve work incentives. Its proposal has three pieces. First it will lower the guarantee to $2500. Second it will introduce an earnings subsidy of 25 cents for each $1 earned up to $10000. So benefits for individuals earning up to $10000 include both the new income guarantee and the earnings subsidy. Then the benefits will finally be reduced at a phase out rate of 50% so the individual loses 50 cents of the maximum benefits (which is maximized at $10000) for each $1 that they earn above $10000. a. Draw the budget constraint facing any individual under the original program in a similar leisureconsumption diagram as in the optimal labor income taxation lecture. Assume that leisure is simply 5000 if the individual does not work and 0 if the individual works 5000 hours. Also assume that consumption is equal to disposable income. Indicate the choice of each individual on the budget constraint. b. Draw the budget constraint facing any individual under the proposed new program. c. For each of the three individuals explain the impact of the new program in terms of income and substitution effects. Which of the three individuals do you expect to work more under the new program? Who do you expect to work less? Are there any individuals for whom you cannot tell if they will work more or less? Show less
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.