Before the sick pay policy was instituted, teachers received no pay for days that they did not work. Consider a teacher who, prior to the introduction of sick pay, took 50 days of sick leave. According to labor supply theory, how will introduction of the sick pay policy described above change the amount of sick leave that this teacher takes? # 1 Sick leave will increase because of substitution and income effects that reinforce each other. Sick leave will increase because of a substitution effect. Sick leave will not change. Sick leave will increase because of an income effect. The change in sick leave is indeterminate because of conflicting substitution and income effects.
Before the sick pay policy was instituted, teachers received no pay for days that they did not work. Consider a teacher who, prior to the introduction of sick pay, took 50 days of sick leave. According to labor supply theory, how will introduction of the sick pay policy described above change the amount of sick leave that this teacher takes? # 1 Sick leave will increase because of substitution and income effects that reinforce each other. Sick leave will increase because of a substitution effect. Sick leave will not change. Sick leave will increase because of an income effect. The change in sick leave is indeterminate because of conflicting substitution and income effects.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Before the sick pay policy was instituted, teachers received no pay for days that they did not work.
Consider a teacher who, prior to the introduction of sick pay, took 50 days of sick leave. According
to labor supply theory, how will introduction of the sick pay policy described above change the
amount of sick leave that this teacher takes?
#1
Sick leave will increase because of substitution and income effects that reinforce each other.
O Sick leave will increase because of a substitution effect.
O Sick leave will not change.
O Sick leave will increase because of an income effect.
O The change in sick leave is indeterminate because of conflicting substitution and income effects.
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