Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 20, Problem 8PA
Subpart (a):
To determine
The difference between the TANF policy and EITC policy.
Subpart (b):
To determine
The difference between the TANF policy and EITC policy.
Subpart (c):
To determine
The difference between the TANF policy and EITC policy.
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Students have asked these similar questions
In California, a welfare recipient is eligible for welfare benefits of $645. Benefits are reduced by 50
cents for every dollar of earnings. Consider Elizabeth, a resident of California, who can earn $10 per
hour.
a. If she works 10 hours, how much are her earnings, how much is her welfare benefit, and how
much is her income?
b. After Elizabeth works a certain number of hours, she does not receive any benefit at all. What is
that number of hours?
c. Use your answer to parts a and b to plot her budget constraint.
d. Sketch a set of indifference curves consistent with Elizabeth's participating in the labor market
Why does the earned income tax credit increase the labor force participation rate of targeted groups?
In California, a welfare recipient can earn $225
per month without having her benefits reduced.
Beyond $225, benefits are reduced by 50 cents
for every dollar of earnings. Consider Elizabeth,
a resident of California, who can earn $10 per
hour. If she does not work at all, she is eligible
for welfare benefits of $645.
a. If she works 10 hours, how much are her
earnings, how much is her welfare benefit,
and how much is her income?
b. After Elizabeth works a certain number of
hours, she does not receive any benefit at
all. What is that number of hours?
c. Use your answer to parts a and b to plot her
budget constraint.
d. Sketch a set of indifference curves consis-
tent with Elizabeth's participating in the
labor market.
Chapter 20 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- Suppose the government introduced a child benefit equal to $7000 per year. For every dollar earned by the family, the benefit amount is reduced by 7 cents. At what level of earnings will the family no longer receive a child benefit?arrow_forwardSee the income and benefits information for a wage earner in an antipoverty program with a phased-out approach in the table below. How much more could one earn in total income if he chose to work 500 additional hours beyond whatever amount he currently works? Table 1: The Labor-Leisure Tradeoff with Assistance Reduced by 50 Cents for Every Dollar Earned Amount Worked Total Government Total (hours) Earnings Support Income $18,000 $20,000 $18,000 500 $4,000 $16,000 1,000 $8,000 $14,000 $22,000 1,500 $12,000 $12,000 $24,000 2,000 $16,000 $10,000 $26,000 2,500 $20,000 $8,000 $28,000 Select the correct answer below: O $0 O $2, 000 $4, 000 O $18, 000arrow_forwardPoverty Trap 7. The American Poverty Trap is a phrase used to describe the tendency for individuals below the poverty line to remain there due to the structure of America's safety-net income stabilization programs. 8. The issue is that federal and state benefits decline as a worker goes from being unemployed to becoming fully employed. As earned income increases, the amount of benefits fall. 9. Thus, the marginal benefit of working is increased income, but the marginal cost includes declining benefits, and a loss of leisure time. 10. Federal and state programs are designed so that as the worker nears the poverty line, the increase in income is matched by a decline in benefits. 11. Thus, the worker gains very little by working more! This structure is actually a disincentive to work. 12. What would be a better solution? End all poverty programs? Provide all citizens a poverty level income stipend? What do you think? What have you been told is the way to avoid being trapped in poverty? D…arrow_forward
- The U.S. Bureau of the Census reported that, on average, white men earn $50, 945, whereas white women earn $31,008. Economic discrimination explains at least some of this wage gap, but economists think that there are other factors that also contibute to wage gaps. Which factor is not an explanation offered by economists for these types of wage gaps? Various groups in the population graduate from college at varying rates. Differences in earnings can be explained in part by differences in educational attainment. Men and women take different types of jobs. Men are more likely to prioritze jobs with higher wages, and women are more likely to prioritize jobs with other desirable characteristics. On average, men and women have different amounts of experience in their jobs. Ceteris paribus, men are less likely to temporarily leave the workforce and, therefore, have more experience than women. There are innate differences between men and women that make men more productive than women. Because…arrow_forwardHow is the market-compensating wage differential between safe jobs and risky jobs determined? Which type of job will offer a higher wage?arrow_forwardWhat makes the Earned Income Tax Credit (EITC) different from other poverty-fighting programs? The amount of the credit is doubled if the head of household is attending college. The tax credit is phased out gradually, rather than at a specific income cutoff point. The amount of the credit is not determined by the number of dependent children in the household. The EITC doesn't require the recipient to pay a minimum amount of income tax in order to receive the credit. It creates less of an incentive to work than other programs.arrow_forward
- Number 6arrow_forwardConsider a person who can work up to 80 hours each week at a pretax wage of $20 per hour but faces a constant 20 percent payroll tax. Under these conditions, the worker maximizes her utility by choosing to work 50 hours each week. The government proposes a negative income tax whereby everyone is given $300 each week and anyone can supplement her income further by working. To pay for the negative income tax, the payroll tax rate will be increased to 50 percent.a. On a single graph, draw the worker’s original budget line and her budget line under the negative income tax.b. Show that the worker will choose to work fewer hours if the negative income tax is a dopted.c. Will the worker’s utility be greater under the negative income tax?arrow_forwardList the six factors that can explain a variance in earnings. Select ONE factor and list two reasons why this you believe this factor has the most influence in wage differences. Why is the price elasticity of supply different for low mobility workers and high mobility workers? In proving that there are earnings differentials caused by discrimination, what three factors are necessary in a study conducted to prove this point?arrow_forward
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