Purchase Solution

No income maintenance program

Not what you're looking for?

Ask Custom Question

Consider a country with no income maintenance program that enacts an Earned Income Tax Credit similar to the US.

a) Among all working people, will this program lead to a reduction in hours worked? prove your answer either graphically or mathematically. state all assumptions.

b) What are the expected effects on labor force participation according to your model?

c) What does empirical evidence on the U.S. experience with the Earned Income Tax Credit predict will be the effect of the new policy?

Purchase this Solution
Solution Summary

The solution answers 3 questions. The questions are stated below. The answers are well explained and thorough.

Solution Preview

Please see the attached file.

labor economics
________________________________________
Consider a country with no income maintenance program that enacts an Earned Income Tax Credit similar to the US.

a) Among all working people, will this program lead to a reduction in hours worked? prove your answer either graphically or mathematically. state all assumptions.

Ans:

According to the backward bending supply curve theory, at relatively low wages, individuals respond to an increase in the wage by working additional hours. Eventually, , when the wage becomes sufficiently high, individuals will begin to work less in response to a higher wage rate. The earned-income tax credit is an alternative method of providing increased income to low-income households. Under an earned-income tax credit, a tax credit is provided that rises with income up to a point and then gradually declines as income rises beyond this point. The earned-income tax credit generates a labor supply disincentive effect. Because the benefit of the Earned Income Credit diminishes as a worker's ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Jackson County Senior Services

    The meals on wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services.

  • Philosophy Behind the "Biggest Loser" Weight Loss Plan

    A discussion on the components and philosophy behind the "Biggest Loser" weight loss program. Discussion on diet, exercise, and maintenance of the program.

  • Dropping or Retaining a Segment

    The meals on wheels program delivers a hot meal once a day to each senior enrolled in the program. The housekeeping service provides weekly housecleaning and maintenance services.

  • Collins Corporation Journal Entry

    The maintenance expense didn't go to the income statement, so expense was understated and thus net income was overstated.

  • Preparing a Budgeted Income Statement

    There is no beginning or ending inventory of equipment. Prepare a budgeted income statement for the year ending December 31, 2011. Please see the attached Excel 97-2003 spreadsheet.

  • Effective Employee Training Programs

    Step 2 The first opportunity for implementation and maintenance of an effective employee-training program is when a new employee is hired.

  • The Project: Scheduling, Resources, and Budgeting

    Employee Stock Purchase Program ? Long Term Equity Based Program ? Hospitalization/ Surgical to Medical Consultation ? Disability Income ? Audit Fees ? Legal expense ? Bank Charges ?

  • Scheduling, Resources and Budgeting

    Staff - Executives’ Salaries - Relocation Allowance - Employee Stock Purchase Program - Long Term Equity Based Program - Hospitalization/ Surgical to Medical Consultation - Disability Income - Audit Fees - Legal

  • Conservatism and Matching Principles in Financial Accounting

    SFAC No. 5 defined earnings as the change in net assets exclusive of investments by owners and distributions to owners, a capital maintenance concept of earnings measurement.

View More Related Solutions