Question: Most jurisdictions allow welfare recipients to earn a small amount of labour market
before the tax back of welfare benefits begins. Using the work-leisure diaram, show how this more realistic welfare program compares to the one described in class. In the late 1990s, the Ontario government increased the amount of labour income disregarded (i.e., allowed before welfare benefits are taxed back), at the same time reducing the overall level of benefits. Analyze the expected impact on labour supply of a prospective welfare recipient of this change in the welfare program.
In class we used a simple model where people chose between either labour or welfare.
Recently Asked Questions
- How do firms contribute to the efficiency of the market economy in ways that networks of independent contractors do not? How are the boundaries of the firm
- Over the past decade, an increasing number of Chinese have decided to invest in Australia. That is, Australian net foreign investment in China is negative. a)
- IfI include direct treatment costs, labor productivity costs, costs of informal care giving, costs to insurers, and quality of life to patients as part of my