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'Extend the Neoclassical Model of Choice to develop a simple Income-leisure model of individual labour supply use the model to explore the argument that higher rates of income tax are disincentives to work.
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'Extend the Neoclassical Model of Choice to develop a simple Income-leisure model of individual labour supply use the model to explore the argument that higher rates of income tax Are disincentives to work. For most households, the single most important source of income is labour i.e. in modern USA families receive on average 89% of income from wages and salaries (Blank, 1988). This essay looks at the trade off between labour/leisure hours and the results that occur when a tax is imposed; notably the income and substitution effects. This essay also takes into account that everybody is different and that an imposition of a higher rate of income tax has more than just the one effect. Obviously some assumptions need to be made; notably its assumed in this essay that the hours in a week that aren't spent at work are spent on leisure time; up to the total of 24 (hours in...
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