Labour Supply: Measurement and Income-Leisure Model

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What is the effect of an increase in the wage rate on labour supply according to the income-leisure model?

It has no effect on labour supply.
It always leads to a decrease in labour supply.
It always leads to an increase in labour supply.
It has an ambiguous effect on labour supply. (correct)

Which type of income maintenance program is most likely to provide a work incentive?

Social assistance
Unemployment insurance
Demogrant
Wage subsidy (correct)

What is the main challenge in estimating the effects of a program on individual behaviour?

Data collection
Program implementation
Identifying causal relationships (correct)
Survey design

What is the primary goal of childcare subsidies?

To increase labour force participation among parents (B) Signup and view all the answers

How does the labour force participation decision fit into the general theory of labour supply?

It is a part of the labour supply decision (A) Signup and view all the answers

What is the purpose of worker's compensation programs?

To provide financial assistance to workers who are injured on the job (C) Signup and view all the answers

What is the term used to describe the maximum amount of income and leisure an individual can attain given the income constraint?

Utility-maximizing equilibrium (A) Signup and view all the answers

What is the effect of an increase in non-labour income on labour supply?

Parallel outward shift of the budget constraint (C) Signup and view all the answers

What determines the willingness to exchange leisure for consumption or income?

MRS (Marginal Rate of Substitution) (C) Signup and view all the answers

What is the net effect of a wage increase on labour supply participation?

Depends on the relative strength of the substitution and income effects (A) Signup and view all the answers

What is the classification of leisure when an increase in income leads to an increase in leisure consumption?

Normal good (C) Signup and view all the answers

What is the main assumption made in the basic income-leisure model?

That consumers have well-defined preferences over all possible combinations of consumption and leisure (C) Signup and view all the answers

What is a key characteristic of an individual who is considered unemployed?

They are actively looking for a job (A) Signup and view all the answers

What is the main goal of designing welfare programs with minimal adverse work incentives?

To direct benefits to those who most need it (C) Signup and view all the answers

What is the labour force participation rate (LFPR) a measure of?

The fraction of the population that participates in the labour force (B) Signup and view all the answers

What is the purpose of overtime premiums?

To induce workers to work overtime (A) Signup and view all the answers

What is a potential issue with unemployment insurance?

It unambiguously reduces incentives to work, thereby reducing overall employment (A) Signup and view all the answers

Labour Supply: Measurement and Income-Leisure Model

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