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Unformatted text preview: hat pays monthly benefits of $1000 to single parents with one child; this benefit is reduced by one dollar for each dollar of earnings. Assume now that this province is considering a policy proposal to adopt a new program that pays to "qualified" recipients a monthly benefit B= 0.5 * ($3200 monthly earnings). For example, a person working 150 hours a month at $8 per hour has earnings of $1200, and in addition this person would receive welfare benefits of B=0.5*($3200-1200)=$1000, for a total income of $2200. To qualify for this proposed program, a person must work 125 hours per month. Draw the budget constraint associated with both the current and the proposed welfare programs for a person who earns $8 per hour. Assume that the maximum number of hours a person can work in a month is 400. Then analyze the work incentives of the proposed program compared to those of the current welfare program. Include a labor-leisure diagram showing the budget constraints under the two programs. Make sure to discuss whether the incentives will vary by one's indifference curve. 4. Read Free Clinic paper and write a one page summary....
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This note was uploaded on 01/18/2012 for the course PADP 8670 taught by Professor Staff during the Fall '10 term at University of Georgia Athens.
- Fall '10