Consider the possibility that government spending increases the amount of hours to be worked in a given time period, say by providing child care. Assume again that the initial amount of consumption and leisure are still just affordable after an increase in spending. How will an increase in government spending affect consumption, hours worked, output and welfare? [Hint: This exercise requires creatively reinterpreting how we apply our model to the data. Think about how we constructed the bounds on our labor/leisure model in terms of hours worked. Remem- ber our model does not have any sleep requirements built into it for instance.]
Consider the possibility that government spending increases the amount of hours to be worked in a given time period, say by providing child care. Assume again that the initial amount of consumption and leisure are still just affordable after an increase in spending. How will an increase in government spending affect consumption, hours worked, output and welfare? [Hint: This exercise requires creatively reinterpreting how we apply our model to the data. Think about how we constructed the bounds on our labor/leisure model in terms of hours worked. Remem- ber our model does not have any sleep requirements built into it for instance.]
Chapter16: Labor Markets
Section: Chapter Questions
Problem 16.12P
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Consider the possibility that government spending increases the amount of hours to be worked in a given time period, say by providing child care. Assume again that the initial amount of consumption and leisure are still just affordable after an increase in spending. How will an increase in government spending affect consumption, hours worked, output and welfare? [Hint: This exercise requires creatively reinterpreting how we apply our model to the data. Think about how we constructed the bounds on our labor/leisure model in terms of hours worked. Remem- ber our model does not have any sleep requirements built into it for instance.]
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