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Chapter 6 Supply of Labor to the Economy: The Decision to Work.

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Presentation on theme: "Chapter 6 Supply of Labor to the Economy: The Decision to Work."— Presentation transcript:

1 Chapter 6 Supply of Labor to the Economy: The Decision to Work

2 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-2 TABLE 6.1 Labor Force Participation Rates of Females in the United States over 16 Years of Age, by Marital Status, 1900–2002 (percentage)

3 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-3 TABLE 6.2 Labor Force Participation Rates for Males in the United States, by Age, 1900–2002 (percentage)

4 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-4 TABLE 6.3 Labor Force Participation Rates of Women and Older Men, Selected Countries, 1965–2002 (percentage)

5 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-5 FIGURE 6.1 An Individual Labor Supply Curve Can Bend Backward

6 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-6 FIGURE 6.2 Two Indifference Curves for the Same Person

7 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-7 FIGURE 6.3 An Indifference Curve

8 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-8 FIGURE 6.4 Indifference Curves for Two Different People

9 Copyright © 2006 Pearson Addison-Wesley. All rights reserved. 6-9 FIGURE 6.5 Indifference Curves and Budget Constraint

10 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.6 The Decision Not to Work Is a "Corner Solution"

11 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.7 Indifference Curves and Budget Constraint (with an increase in nonlabor income)

12 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.8 Wage Increase with Substitution Effect Dominating

13 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.9 Wage Increase with Income Effect Dominating

14 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.10 Wage Increase with Substitution Effect Dominating: Isolating Income and Substitution Effects

15 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.10 Wage Increase with Substitution Effect Dominating: Isolating Income and Substitution Effects (cont.)

16 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.10 Wage Increase with Substitution Effect Dominating: Isolating Income and Substitution Effects (cont.)

17 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.11 The Size of the Income Effect Is Affected by the Initial Hours of Work

18 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.12 Reservation Wage with Fixed Time Costs of Working

19 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.13 Budget Constraint with a Spike

20 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.14 Income and Substitution Effects for the Basic Welfare System

21 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.15 The Basic Welfare System: A Person Not Choosing Welfare

22 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.16 The Welfare System with a Work Requirement

23 Copyright © 2006 Pearson Addison-Wesley. All rights reserved FIGURE 6.17 Earned Income Tax Credit (Unmarried, One Child), 2003


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