The Impact of Income Maintenance Programs on Hours of Work and Incomes of the Working Poor: Some Empirical Results,
RAND CORP SANTA MONICA CALIF
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Negative income tax programs are discussed in regard to how they affect work incentives in two ways, both of which tend to reduce the labor supply. First, they pay a subsidy to participating families. Second, they impose a tax rate on earnings, which encourages those who are taxed to reduce their work effort. The first program effect on incentives is called an income effect and the second a substitution effect.
- Sociology and Law