17 Questions
What is a key challenge in estimating the effect of a program on individual behaviour?
Difficulty in separating income and substitution effects
What is the primary goal of childcare subsidies in the labour market?
To increase labour market participation of women
According to the labour supply model, what is the effect of an increase in the wage rate on labour supply?
It has an ambiguous effect on labour supply
What is the main difference between demogrants and social assistance programs?
Demogrants are not means-tested, while social assistance programs are
What is the primary effect of unemployment insurance on labour supply?
It decreases labour supply
What is the labour force participation decision?
The decision to work or not
What is the optimal amount of income and leisure in a utility-maximizing equilibrium?
The highest indifference curve given the income constraint
What is the effect of an increase in non-labour income on the labour supply decision?
Leisure becomes a normal good, leading to less work hours
What determines the willingness to exchange leisure for consumption or income?
The MRS
What happens to hours of work if the income effect of a wage increase dominates?
Hours of work decrease
What is the term used to describe the graphical representation of the trade-off between leisure and income?
Budget constraint
What is the primary assumption made in the Basic Income-Leisure Model of Labour Supply?
Consumers have well-defined preferences over consumption and leisure
What is the main objective of designing welfare programs that minimize adverse work incentives?
To direct benefits to those who need it most
Why are workers typically paid an overtime premium rather than a higher wage to induce them to work overtime?
To recognize the disutility of working overtime
What is the labour force participation rate (LFPR) calculated as?
LFPR = LF / POP
What is a requirement for an individual to be considered unemployed?
The person must be actively looking for a job in the previous four weeks
What is the main argument against unemployment insurance?
It unambiguously reduces incentives to work
Understand the key elements of labour force measurement, including employment, unemployment, labour force participation, and hours worked. Learn how to graphically illustrate the income-leisure model and distinguish between individual work choices and economic opportunities.
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