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Consider a welfare state that provides a guaranteed income of $12,000 to everyone regardless of income. This benefit is reduced by $1 for each $1
Consider a welfare state that provides a guaranteed income of $12,000 to everyone regardless of income. This benefit is reduced by $1 for each $1 of earned labor income. Policymakers are considering reform the transfer system such that the benefit is now reduced by $1$ for every $2 of earned labor income .
(i) What will the effect of this reform be on the number of hours supplied by individuals?
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