Question

Shortly explain your answer in a few sentences (one short paragraph), indicating your assumptions (if any) for the relationship to hold and use a graphical illustration in ALL answers to demonstrate it (except in questions where indicated as not needed).

In the basic model of individual labor supply, State whether the following statements are true or false, and explain the assumptions for your answer and use graphs.

a)A decrease of the tax rates on wages will increase hours worked.

b)The government introduction of a monthly cash grant of 500 EGP to all those working in informal sector will decrease their hours of work.

using words, no need to uses graphs:

c)Explain whether the effect in a) above is expected to be stronger for men or women and why?

d)Instead of using taxation of income or giving a benefit of cash, suggest an alternative type of policy that would incentivize labor force participation? Explain why this is better for workers incentives and your assumptions.

Answer 1