Recall that leisure time in our model of the representative consumer is intended to capture any time spent not working in the market, including production at home such as yard work and caring for children. Suppose that the government were to provide free day care for children and, for the purpose of analyzing the effects of this, assume that this has no effect on the market real wage w, taxes T, and dividend income π. Determine the effects of the day care program on consumption, leisure, and hours worked for the consumer.

  • CreatedDecember 05, 2014
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