Question

QUESTION 1 In some countries, cash assistance, say $700 per month are given to eligible people (such as a single mother with children) as long as they remain outside the labor force. If these people enter the labor force, the government assumes that they no longer need public assistance and the women are dropped from this welfare program regardless of how much they earn. Using a proper diagram, explain the impact of this cash assistance on work incentive for a single mother with children. In particular, you must utilize the indifference curve analysis to explain your answer. Assumption: The mother does not have other options of non labour income except cash assistance of $700 and policy of the government for cash assistance remain the same. (9 marks)

Answer 1

The anwsers for the above question is given below

ccrtain from a government As from the government the women can have a Position. If or else if she gets a Job then she may not get financial assistance from youtsmast. d gets a income about the financial assistance of $700. then it will offect her satisfaction and her Security. Has she can achieve higher sahipleban higher when she e goes for Job and with income Satis wa vile faction Security S Х At the work. as labour The above is shows the mother with childoen. sogle Maps of the works as labour Vis Subfuchion and security Where za obily Perimizing point line Xs welfare from government X2TW is budget constsaint from the government X2 is hers benefit Singencial assis Kance

as an With the increase in satisfaction and security. Due to the incoeased income by the Job may function incentive to get employed by refusing lady to go for Job instead of keeping hersef unemployed - Frosted if she go for an Job. and received an income less than $700 it may indirectly offeet her satisfaction and goodness as happiness . As she is not able to achieve same or higher satisfaction with received from the Job o the decrease in wahifachion and crifare due to the deceased income received an income which is less than $700, which may peovent herself as employed with less remunerative Job. From this it is clear that higher income can work. as an incentive to and induce cmployed to get people do Jobs. which can higher heo satisfac fion and Security the low income to