a) You are asked to advise the government regarding the proposed introduction

of the 5 000 SEK grant for individuals who earn less than 15

000 SEK per month.

Describe the expected effect of this policy using your own words. Clearly state

your assumptions.

b) You are also asked to evaluate the effect of the policy after its introduction.

Describe how you would estimate the effect of such a policy on the labor supply.

Clearly state your assumptions and the data you need.