Explain the result make sure to mention the income

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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....
View Full Document

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.

Ask a homework question - tutors are online