SIMON FRASER ECON290 Tut8

SIMON FRASER ECON290 Tut8 - workers: (1) lump-sum transfer,...

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Economics 290: Canadian Microeconomic Policy Tutorial #8 1. Government is considering the following two options to give childcare subsidies to poor parents: (1) write a check (cash subsidy), and (2) subsidize the hourly rate that a poor family pays for daycare (per-unit subsidy). (a) If both programs are equally costly to the government, which program is preferred by the poor families? Why? (b) If both programs leave the poor parents equally as well off, which program is more costly to the government? (c) How do taxpayers feel about these two programs? Do they prefer one over another? 2. Out of the following three programs: (1) lump-sum transfer, (2) wage rate subsidy, and (3) topping-up mechanism, which program is also known as efficient transfer program? Why the efficient transfer program is not practical? 3. Government is considering the following three policy options to help the low income
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Unformatted text preview: workers: (1) lump-sum transfer, (2) wage rate subsidy, and (3) topping-up mechanism. (a) If these three programs are equally costly to the government, rank these income assistance programs in terms of work incentives. Which program induces most hours of work? Which program induces least hours of work? Explain. (b) If the above three programs are equally costly to the government, rank these income assistance programs in terms of recipients total income. Under which program will the recipient receive most income? Under which program will the recipient receive least income? Explain. (c) If the above three income assistance programs are equally costly to the government, which program is preferred by recipients? Explain....
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