Suppose a single parent can work up to 16 hours per day at

Reference no: EM13378376

Suppose a single parent can work up to 16 hours per day at a wage rate of $10.00 per hour. Various income maintenance programs have been developed to assure a minimum level of income for low-income families, such as Aid to Families with Dependent Children (AFDC). One of the problems with AFDC is that benefits were reduced by $1 for every dollar earned, which creates a no-work incentive for those who are eligible. An alternative income maintenance program is Temporary Assistance for Needy Families (TANF), which also offers a no-work benefit but a smaller reduction in wages for every dollar earned. The subsidy ends when the money income with program participation equals the money
income earned without the program. A simplified version of this type of program is one that would give this single parent a $40 grant accompanied by a benefit reduction of 75 cents for every dollar earned.
a. Draw the daily budget constraint without any program participation for the single parent described above.
b. On the same graph, draw the daily budget constraint under TANF for the single parent described above. At what level of money income does the subsidy end? How many hours of work would this be? Discuss the effect of program participation on work incentives.
c. On the same graph, draw the daily budget constraint under AFDC for the single parent. According to AFDC, the family was given an income subsidy depending on family size and the family's benefit was reduced by $1 for every dollar earned. Suppose the maximum subsidy for
the single parent is $40.
d. Compare the effect of the TANF program on work incentives compared to the AFDC program

Reference no: EM13378376

Questions Cloud

Maria and emmanuel need to cut logs for shelter or gather : maria and emmanuel need to cut logs for shelter or gather food to stay alive per day. maria produces 10 cut logs of

Economic growth is a major issue in the current : economic growth is a major issue in the current presidential election. the romney campaign argues that tax cuts for

Use the following equations for demand and supply to solve : use the following equations for demand and supply to solve for market equilibrium price and quantitydemand qd 100 -

Suppose that wal-world and tarbo are independently deciding : suppose that wal-world and tarbo are independently deciding whether to implement a new bar code technology. it is less

Suppose a single parent can work up to 16 hours per day at : suppose a single parent can work up to 16 hours per day at a wage rate of 10.00 per hour. various income maintenance

Consider the following linear programming problemmin a : consider the following linear programming problemmin a 2bs.t.a 4blt or equal to 212a b gt or equal to 73a 1.5b lt or

Suppose a single parent can work up to 16 hours per day at : suppose a single parent can work up to 16 hours per day at a wage rate of 10.00 per hour. various income maintenance

Advocates of higher salaries for teachers point out that : advocates of higher salaries for teachers point out that most teachers have college degrees and that teaching children

You are an economic consultant to a city that just imposed : you are an economic consultant to a city that just imposed a payroll tax of 1 per hour of work. this payroll tax is

User Account

All Pages