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Chapter 15: Q.33 (page 378)

Explain how you would create a government

program that would give an incentive for labor to

increase hours and keep labor from falling into the

poverty trap.

Short Answer

Expert verified

By reducing welfare payments by Government

Step by step solution

01

Step 1. Definition 

Welfare payments

Payments provided by the government as an aid to the needy people to meet their basic needs are referred to as welfare payments.

02

Step 2. Explanation

Welfare payment program by the government should not increase incentives on more working hours, rather they can decrease working hours for low paying jobs, in order to encourage people to work hard for high paying jobs.

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Most popular questions from this chapter

Exercise 15.2 and Exercise 15.3 asked you to

describe the labor-leisure tradeoff for Jonathon. Since,

in the first example, there is no monetary incentive for

Jonathon to work, explain why he may choose to work

anyway. Explain what the opportunity costs of working

and not working might be for Jonathon in each example.

Using your tables and graphs from Exercise 15.2 and

Exercise 15.3, analyze how the government welfare

system affects Jonathan’s incentive to work.

A group of 10 people have the following annual incomes: \(24,000, \)18,000, \(50,000, \)100,000, \(12,000,

\)36,000, \(80,000, \)10,000, \(24,000, \)16,000. Calculate the share of total income that each quintile receives from this

income distribution. Do the top and bottom quintiles in this distribution have a greater or larger share of total income than the top and bottom quintiles of the U.S. income distribution?

We have discovered that the welfare system discourages recipients from working because the more income they earn, the less welfare benefits they receive. How does the earned income tax credit attempt to loosen the poverty trap?

Suppose there are two possible income distributions in a society of ten people. In the first distribution, nine people would have incomes of \(30,000 and one person would have an income of \)10,000. In the second distribution, all ten people would have incomes of $25,000.

a. If the society had the first income distribution, what would be the utilitarian argument for redistributing income?

b. Which income distribution would Rawls consider more equitable? Explain.

c. Which income distribution would Nozick consider more equitable? Explain.

Identify some public policies that can reduce the

level of economic inequality.
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