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Problem 2. (20 points) Income-maintenance policy: Social assistance and the Self-Sufficiency Project Part (a) Draw the appropriate income-leisure graph for a worker who receives no
Problem 2. (20 points) Income-maintenance policy: Social assistance and the Self-Sufficiency Project Part (a) Draw the appropriate income-leisure graph for a worker who receives no non- labour income. This individual can work a maximum of 60 hours per week, at a wage rate of $5 per hour. Part (b) Please draw a second incomeleisure graph for this worker, who is now eligible to receive social assistance (welfare) benets that are fixed at $200 per week, with a 100 percent tax back on labour earnings. Part (c) An earnings supplement program, modelled after the Self-Sufciency Project, is introduced in addition to the social assistance benets program. Please draw a third income-leisure graph. The earnings supplement equals half the difference between an individual's labour earnings and the benchmark earnings of $450 per week. This supplement can be collected only if the individual forgoes welfare benets and works a minimum of 30 hours per week. Part (d) In brief, describe the decision to work by this individual in the presence of the earning supplement program
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