17 Questions
What is the effect of an increase in the wage rate on labour supply according to the income-leisure model?
It has an ambiguous effect on labour supply.
Which type of income maintenance program is most likely to provide a work incentive?
Wage subsidy
What is the main challenge in estimating the effects of a program on individual behaviour?
Identifying causal relationships
What is the primary goal of childcare subsidies?
To increase labour force participation among parents
How does the labour force participation decision fit into the general theory of labour supply?
It is a part of the labour supply decision
What is the purpose of worker's compensation programs?
To provide financial assistance to workers who are injured on the job
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
What is the effect of an increase in non-labour income on labour supply?
Parallel outward shift of the budget constraint
What determines the willingness to exchange leisure for consumption or income?
MRS (Marginal Rate of Substitution)
What is the net effect of a wage increase on labour supply participation?
Depends on the relative strength of the substitution and income effects
What is the classification of leisure when an increase in income leads to an increase in leisure consumption?
Normal good
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
What is a key characteristic of an individual who is considered unemployed?
They are actively looking for a job
What is the main goal of designing welfare programs with minimal adverse work incentives?
To direct benefits to those who most need it
What is the labour force participation rate (LFPR) a measure of?
The fraction of the population that participates in the labour force
What is the purpose of overtime premiums?
To induce workers to work overtime
What is a potential issue with unemployment insurance?
It unambiguously reduces incentives to work, thereby reducing overall employment
This quiz covers the key elements of labour force measurement, including employment, unemployment, and labour force participation. It also explores the income-leisure model and its application to individual work choices.
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