Scenario 6-3. Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. Answer the questions below and calculate for the first 800 hours of work. Figure 6-3 Consumption $40,000 A B C D Leisure (hours) 4,000

Scenario 6-3. Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. Answer the questions below and calculate for the first 800 hours of work. Figure 6-3 Consumption $40,000 A B C D Leisure (hours) 4,000

Survey of Economics (MindTap Course List)

9th Edition

ISBN:9781305260948

Author:Irvin B. Tucker

Publisher:Irvin B. Tucker

Chapter10: Labor Market And Income Distribution

Section10.8: Discrimination

Problem 1YTE

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Susan is a single mother with three children. She is a cashier at a food market earning $7.75 per hour and works up to 2,000 hours per year. She is eligible for government benefits, so if she does not earn any income, she will receive a total of $17,050 per year. She can work and still receive government benefits, but for every $1 of income, her government stipend is $1 less. The government has decided to change the benefits policy of every $1 of income earned to reduce the government’s stipend by 60 cents. How will this change Susan's benefits received? What are her new choices? Complete the Revised Poverty Trap Table to present Susan’s options and provide answers to the following: What are the advantages of Susan working? What are the disadvantages of Susan working? What are the advantages of Susan receiving government benefits? What are the disadvantages of Susan receiving government benefits? Based on your findings from the Poverty Trap Table, should Susan continue to work or…
Susan is a single mother with three children. She is a cashier at a food market earning $7.75 per hour and works up to 2,000 hours per year. She is eligible for government benefits, so if she does not earn any income, she will receive a total of $17,050 per year. She can work and still receive government benefits, but for every $1 of income, her government stipend is $1 less. The government has decided to change the benefits policy of every $1 of income earned to reduce the government’s stipend by 60 cents. How will this change Susan's benefits received? What are her new choices? Complete the Revised Poverty Trap Table to present Susan’s options and provide answers to the following: What are the advantages of Susan working? What are the disadvantages of Susan working? What are the advantages of Susan receiving government benefits? What are the disadvantages of Susan receiving government benefits? Based on your findings from the Poverty Trap Table, should Susan continue to work…
As a hypothetical case, suppose the typical individual has a utility function expressed as U = (C – 50)*(L – 10), where C is consumption and L is leisure time. The current wage, w,is $5 and she has a weekly return on assets of V0020= $100. She only has 60 hours per week to divide between work hours, h, and Leisure. A number of countries and communities are considering implementing a “Guaranteed Basic Income” as policy. A “Guaranteed Basic Income” is a government payment of a fixed a amount of money for each personSuppose the country of interest sets the weekly payment at $100. Using the Neo-classical labor supply with reference to specific numerical values discuss the consequences of the above “Guaranteed Basic Income”. Using the basic Supply and Demand for labor approach discuss the consequences of the “Guaranteed Basic Income” policy on the overall labor market. 3.Using a feedback approach, from the Neo-classical labor supply to market equilibrium and back to labor supply,…
Suppose that the government introduces an EITC such that for the first $8,000 in earnings, the government pays 50¢ per dollar on wages earned. For the next $3,000 of earnings, the credit is held constant at $4,000, and after that point, the credit is reduced at a rate of 20¢ per dollar earned. When the credit reaches zero, there is no additional EITC. Furthermore assume a worker who can work up to 4,000 hours per year at an hourly wage of $10 per hour. 1. The benefit of EITC will disappear at how many hours of leisure? (use just numbers) 2. When the EITC disappears how much does the worker get to consume (do not use $ sign)
Consider an individual aged 64 who is eligible to collect full social security (public pension) benefits of $6,000 for a year. They have no other income but can work at a weekly wage rate of $600 for a maximum of 52 weeks. Receipt of benefits from the social security program is retirement tested. Specifically, the individual can earn up to $9,000 in annual wage income without a reduction in benefits; however, after $9,000 of earnings, benefits are reduced by 50% for every dollar earned, until the benefits are exhausted. a) Carefully draw and label the budget constraint for this individual. b) Suppose previously there was a retirement test, and then the test is eliminated, i.e., the individual now is allowed to keep all benefits, irrespective of their labour earnings. How would this affect the individual’s labour supply? Question Two David is a 70-year-old accountant. After serving his accounting firm for 45 years, David decides to retire soon. David has great passion for vintage cars…
Suppose the labour market is summarised as: Demand: P = 100-Q Supply: P = Q The government imposes a minimum wage. However, consumers (firms) are unsurprisingly unhappy with the increase in wages and are negotiating with labour unions to return to the equilibrium wage. The union will agree to this if firms offer a lump sum transfer to producers (workers) equivalent to the maximum firms are willing to give, $1069.5. How much was the minimum wage? a. $97 b. $81. c. $73 d. $87
As a hypothetical case, suppose the typical individual has a utility function expressed as U = (C – 50)*(L – 10), where C is consumption and L is leisure time. The current wage, w, is $5 and she has a weekly return on assets of V = $100. She only has 60 hours per week to divide between work hours, h, and Leisure. A number of countries and communities are considering implementing a “Guaranteed Basic Income” as policy. A “Guaranteed Basic Income” is a government payment of a fixed a amount of money for each person Suppose the country of interest sets the weekly payment at $100. i) Using the Neo-classical labor supply with reference to specific numerical values discuss the consequences of the above “Guaranteed Basic Income”. ii) Using the basic Supply and Demand for labor approach discuss the consequences of the “Guaranteed Basic Income” policy on the overall labor market. iii) Using a feedback approach, from the Neo-classical labor supply to market equilibrium and back to labor…
the employee has worked. A typical case Luba works on commission and has a weekly pay period. One week, she was paid $150.00 in commission and worked 25 hours. The minimum wage applicable to Luba is $14.25 an hour. The minimum wage ($14.25) multiplied by the number of hours worked in the pay period (25) is $356.25. Luba is owed the difference between her commission pay ($150) and the required minimum wage ($356.25). Calculate: Luba's employer owes her $
Consider an income guarantee program with an income guarantee of $3,000 and a benefit reduction rate of 50%. A person can work up to 2,000 hours per year at $6 per hour. Mia, Lucas, Thomas, and Deborah work for 100, 333 %, 400, and 600 hours, respectively, under this program. The government is considering altering the program to improve work incentives. Its proposal has two pieces. First, it will lower the guarantee to $2.000. Second, it will not reduce benefits for the first $3,000 earned by the workers. After this, it will reduce benefits at a reduction rate of 50%. a. Draw the budget constraint facing any worker under the original program. Explain. b. Draw the budget constraint facing any worker under the proposed new program. Explain. I c. Which of the four workers do you expect to work more under the new program? Who do you expect to work less? Are there any workers for whom vou cannot tell if they will work more or less? Explain.
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Laura earns a base salary of $50,000 as an event planner and is subject to the following hypothetical income tax bracket. Laura is considering taking on an additional wedding that will increase her income by $5,000. In order for Laura to deem the wedding worth her time, it must earn her $3,000 after taxes. Please round all answers to two decimal places. Income Tax rate $0-$10,000 5% $10,001-$30,000 10% 20% $30,001-$50,000 $50,001+ 50% What is the marginal tax rate associated with taking on this wedding? 50 What is Laura's average tax rate if the extra wedding is accepted? 0.1636
Suppose a single parent can work up to 16 hours per day at a wage rate of $30 per hour and has no non-labour income. An income maintenance program has been developed to assure a minimum level of income for low-income families. A simplified version of this type of a program is one that would give this single parent a $120 no-work grant accompanied by a benefit reduction of a dollar for every dollar earned until no benefit is left to pay. For example, to someone who does not work the program pays $120, while for someone who works 1 hour and earns $30 the benefit is reduced by $30 to $90. Draw the daily budget constraints with and without program participation for the single individual described above on the plane that has leisure L on the horizontal axis, and money income Y (inclusive of benefits if on a program) on the vertical axis. Carefully mark all the important points of the constraints and indicate the slopes. Question: At what level of labour market earningsdoes the subsidy end?…