Suppose the US adopts a form of universal basic income program in which each household is guaranteed to have at least $3,000 in monthly income. For example, if a household’s average monthly income falls below $3,000 in a given quarter, then the difference is made up with federal direct payments. How would this program affect workers’ decisions to participate in the labor force? How would this program impact income equality in the US?

Suppose the US adopts a form of universal basic income program in which each household is guaranteed to have at least $3,000 in monthly income. For example, if a household’s average monthly income falls below $3,000 in a given quarter, then the difference is made up with federal direct payments. How would this program affect workers’ decisions to participate in the labor force? How would this program impact income equality in the US?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter28: The Distribution Of Income And Poverty

Section: Chapter Questions

Problem 6QP

See similar textbooks

Similar questions

Maria earns $15 per hour in her current job and works 40 hours a week. Her disutility of effort is measured as $1 per hour of work. In the case that she loses her job, she receives $5 per hour unemployment benefit. Additionally, being unemployed has psychological and social costs which is a disutility equivalent to $2 per hour. Which of the following statements is correct? Include a brief explanation (one sentence and/or equation) to justify why each statement is correct or incorrect. A). Her employment rent per hour is $3. B). If she can get another job with the same wage rate and weekly hours after 44 weeks of being unemployed, Maria’s total employment rent is more than $10,000. C). If the unemployment benefits she could receive if she lost her job increased to $7/hour, her employment rent would also increase. D). If her disutility of effort at her current job increased to $4/hour, her employment rent increases.
Since the official poverty line was set at $3000 in 1964, prices have risen by about a factor of 7.5. If the poverty line was adjusted only for inflation, what would it be now? How does that compare with the actual poverty line?
Imagine someone living close to the poverty line in a developing country. This person runs a small business filtering and selling water. Her daughter gets sick, and she has to sell her filtering machine to pay for treatment. Now she makes very little money cleaning fish for a local fishing cooperative. Graph her income today versus her income tomorrow before her daughter got sick. Explain your assumptions with labels on the graph. Then graph what happens to the equilibrium after her daughter gets sick. Hint: this is an example of a trap.
What makes the Earned Income Tax Credit (EITC) different from other poverty-fighting programs? The amount of the credit is doubled if the head of household is attending college. The tax credit is phased out gradually, rather than at a specific income cutoff point. The amount of the credit is not determined by the number of dependent children in the household. The EITC doesn't require the recipient to pay a minimum amount of income tax in order to receive the credit. It creates less of an incentive to work than other programs.
Consider an income guarantee program with an income guarantee of $3,000 and a benefit reduction rate of 50%. A person can work up to 2,000 hours per year at $6 per hour. Mia, Lucas, Thomas, and Deborah work for 100, 333 %, 400, and 600 hours, respectively, under this program. The government is considering altering the program to improve work incentives. Its proposal has two pieces. First, it will lower the guarantee to $2.000. Second, it will not reduce benefits for the first $3,000 earned by the workers. After this, it will reduce benefits at a reduction rate of 50%. a. Draw the budget constraint facing any worker under the original program. Explain. b. Draw the budget constraint facing any worker under the proposed new program. Explain. I c. Which of the four workers do you expect to work more under the new program? Who do you expect to work less? Are there any workers for whom vou cannot tell if they will work more or less? Explain.
The poverty line is based on cash income, which means it does not take into account government programs that provide assistance to the poor in a non-cash form, like Medicaid (health care for low-income individuals and families) and food aid. Also, low-income families can qualify for federal housing assistance. Should the poverty line be adjusted to take the value of such programs into account
Suppose the government introduced a child benefit equal to $7000 per year. For every dollar earned by the family, the benefit amount is reduced by 7 cents. At what level of earnings will the family no longer receive a child benefit?
Mike’s utility function for consumption and leisure is U=CL and T=168. Mike earns $10 per hour. What is Mike’s optimal amount of C and L? If the government starts a welfare policy that pays B dollars to all nonworkers and $0 to all worker, at what value of B will Mike find it optimum being out of the labour force in order to go on welfare?
The AB line in the below graph represents a worker's budget constraint (AB line). A utility- maximizing worker chooses the consumption- leisure bundle at point P, where the indifference curve is tangent to the budget line. Please analyze the impact of a new unemployment benefit program that consists in an amount "AG" if the worker is unemployed. This benefit is lost if the worker finds a job (even if he only works for one hour). B G A U1 Hours of Leisure
In 2000, the ratio of people age 65 or older to people ages 20 to 64 in Ecocountry was 38,4 %. In the year 2060, this ratio is expected to be 56,8 %. Assuming a pay as-you-go Social Security system, What change in the payroll tax rate between 2000 and 2060 would be needed to maintain the 2000 ratio of benefits to wages? If the tax rate were kept constant, what would happen to the ratio of benefits to wages? What other policies can be used for Social Security Reform?
Which of the following provides the best explanation for how consumer credit can exacerbate inequality? People with lower wealth and incomes must sacrifice more capacity and capital in order to acquire credit. People with lower wealth and incomes purchase less, so since credit allows all people to make purchases sooner, credit provides less benefit to these people. People with lower wealth and incomes may have less access to credit and pay higher interest rates when they are approved. People with lower wealth and incomes are offered credit with less collateral.
Federal Income Tax Withholding Bob Browning's weekly gross earnings for the present week were $2,290. Browning has four exemptions. Using the wage bracket withholding table in Exhibit 2 with a $81 standard withholding allowance for each exemption, what is Browning's federal income tax withholding? Round your answer to two decimal places. Feedback