Consider two of the income security programs inthe United States: Temporary Assistance for NeedyFamilies (TANF) and the Earned Income Tax Credit(EITC).a. When a woman with children and very lowincome earns an extra dollar, she receives less inTANF benefits. What do you think is the effectof this feature of TANF on the labor supply oflow-income women? Explain.b. The EITC provides greater benefits as lowincome workers earn more income (up to apoint). What do you think is the effect of thisprogram on the labor supply of low-incomeindividuals? Explain.c. What are the disadvantages of eliminating TANFand allocating the savings to the EITC?
Consider two of the income security programs inthe United States: Temporary Assistance for NeedyFamilies (TANF) and the Earned Income Tax Credit(EITC).a. When a woman with children and very lowincome earns an extra dollar, she receives less inTANF benefits. What do you think is the effectof this feature of TANF on the labor supply oflow-income women? Explain.b. The EITC provides greater benefits as lowincome workers earn more income (up to apoint). What do you think is the effect of thisprogram on the labor supply of low-incomeindividuals? Explain.c. What are the disadvantages of eliminating TANFand allocating the savings to the EITC?
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Question
Consider two of the income security programs in
the United States: Temporary Assistance for Needy
Families (TANF) and the Earned Income Tax Credit
(EITC).
a. When a woman with children and very low
income earns an extra dollar, she receives less in
TANF benefits. What do you think is the effect
of this feature of TANF on the labor supply of
low-income women? Explain.
b. The EITC provides greater benefits as lowincome workers earn more income (up to a
point). What do you think is the effect of this
program on the labor supply of low-income
individuals? Explain.
c. What are the disadvantages of eliminating TANF
and allocating the savings to the EITC?
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