Lec_21_safety

Lec_21_safety - Exams returned in this week's discussion...

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1 Exams returned in this week’s discussion sections Rough grading scale for second exam: • A: 84-100 • B: 70-83 • C: 51-69 • D: 39-50 • F: below 38 • median score on second exam: 68 More info at: http://dss.ucsd.edu/~jhamilto/Econ2_grades2.html Chapter 13: Labor Markets, Poverty, and Income Distribution D. Determinants of wages E. Measuring inequality F. Trends in inequality G. Policies for addressing inequality 1. Raising the minimum wage 2. Taxes 3. Direct assistance Single mother of 2 in Oklahoma in 1999 working at minimum wage ($5.15/hr) $1,454 $1,272 $828 total resources -32 0 0 childcare copay 121 207 207 Medicaid 223 311 329 food stamps 0 163 292 TANF -68 -34 0 FICA 318 179 0 EITC 892 446 0 wages 40 hr/week 20 hr/week no work Source: Hepner and Reed, Univ. of Okla., 2003 If she went from part-time to full-time, she would work an extra 20 hours per week in order to make her income rise from $1,272 to $1,454 Net pay rate: $2.10/hour Basic tradeoff: Equity : we’d like the outcome to be equal and fair where everyone enjoys a decent standard of living Efficiency : we’d like to make sure that the incentives encourage everyone to have as high a standard of living as possible Chapter 13: Labor Markets, Poverty, and Income Distribution D. Determinants of wages E. Measuring inequality F. Trends in inequality G. Policies for addressing inequality 1. Raising the minimum wage 2. Taxes 3. Direct assistance 4. Negative income tax
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2 Negative income tax: If your income is Y , your tax is -$10,000 + 0.25 x Y 85,000 15,000 100,000 47,500 2,500 50,000 19,000 -7,000 12,000 14,500 -8,500 6,000 10,000 -10,000 0 after-tax income taxes owed wage income 0.15 85,000 15,000 100,000 0.05 47,500 2,500 50,000 0 19,000 -7,000 12,000 0 14,500 -8,500 6,000 0 10,000 -10,000 0 average tax rate after-tax income taxes owed wage income 0.25 0.15 85,000 15,000 100,000
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Lec_21_safety - Exams returned in this week's discussion...

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