2. 4 Welfare programs and work incentives a take-it-or-leave it cash grant The newer programs often permit the welfare recipient to work. but reduce the amount of the grant by some specified amount for every dollars earned in the labor market. Taxing the welfare recipient Figure pp50 Welfare programs reduce labor supply, both in terms of employment probabilities and in terms of hours worked 16
16 2.4 Welfare programs and work incentives • A take-it-or-leave it cash grant • The newer programs often permit the welfare recipient to work, but reduce the amount of the grant by some specified amount for every dollars earned in the labor market. Taxing the welfare recipient Figure pp50 • Welfare programs reduce labor supply, both in terms of employment probabilities and in terms of hours worked
2. 5 The non-market sector: household proauction Much of what we call"leisure is really a form of work Women allocate more hours to the non- market sector than men Household production function The households opportunity frontier Figure pp54 a division of labor in a household pp56 17
17 2.5 The non-market sector: household production • Much of what we call “leisure” is really a form of work. • Women allocate more hours to the nonmarket sector than men. • Household production function • The household’s opportunity frontier Figure pp54 • A division of labor in a household pp56
Difference in the market wage rate and marginal product in the household sector The increase in the real wage of women, technological changes in household production also reduce the difference in marginal products between husband and 2.6 Estimates of the labor supply elasticity h=aw+bv+welfare +other variable
18 • Difference in the market wage rate and marginal product in the household sector • The increase in the real wage of women, technological changes in household production also reduce the difference in marginal products between husband and wife. 2.6 Estimates of the labor supply elasticity • h=aw+bV+cwelfare+other variable
a=-0 1(men) inelastic(annual hours of work) the labor supply becomes more elastic the longer the time period over which the hours-of-work variable is defined Pwomen=aw+by+welfare +achild+dWhusband tother variable Other variable includes culture factors and the institutional framework
19 a= -0.1 (men) inelastic (annual hours of work) the labor supply becomes more elastic the longer the time period over which the hours-of-work variable is defined. • Pwomen=aw+bV+cwelfare+dchild+dWhusband+other variable Other variable includes culture factors and the institutional framework