Assume that the current disability benefit for individuals with disabilities that prevent them from working full time, is X kroner per day. The disability benefit goes to zero if a worker accepts a job for even one hour per week. Suppose that the benefit rules are changed so those disabled workers who take jobs that pay less than X kroner per day receive a benefit that brings their total daily income (wage plus the benefit) up to X kroner. When labor market earnings of a disabled individual rises above X kroner per day, their disability benefits end. Draw the old and the new budget constraints (label each clearly) associated with the disability benefit program, and analyze the work incentive effects of the change in benefits

Assume that the current disability benefit for individuals with disabilities that prevent them from working full time, is X kroner per day. The disability benefit goes to zero if a worker accepts a job for even one hour per week. Suppose that the benefit rules are changed so those disabled workers who take jobs that pay less than X kroner per day receive a benefit that brings their total daily income (wage plus the benefit) up to X kroner. When labor market earnings of a disabled individual rises above X kroner per day, their disability benefits end. Draw the old and the new budget constraints (label each clearly) associated with the disability benefit program, and analyze the work incentive effects of the change in benefits

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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