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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

Who are the near-poor?

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?

Briefly explain the differences between TANF, the earned income tax credit, SNAP, and Medicaid.

Consider two of the income security programs in the United States: Temporary Assistance for Needy Families (TANF) and the Earned Income Tax Credit (EITC).

a. When a woman with Children and very low income earns an extra dollar, she receives less in TANF benefits. What do you think is the effect of this feature of TANF on the labor-supply of low-income women? Explain.

b. The EITC proves greater benefits as low-income workers earn more income (up to a point). What do you think is the effect of this program on the labor-supply of low-income individuals? Explain.

c. What are the disadvantages of eliminating TANF and allocating the savings to EITC?

How does the TANF attempt to loosen the poverty trap?
See all solutions

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