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10. First, lets look at the working decision of an individual. max{(1-1)+(1-1)w 1; +T_) subject to 1, 0 where is the tax rate and

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10. First, lets look at the working decision of an individual. max{(1-1)+(1-1)w 1; +T_) subject to 1, 0 where is the tax rate and T is the transfer received from the other person. With the same technique as above, you find that the now the critical w, at which a person starts working increases from 1/2 to. 2(1-1)

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