Question: Explain why a lump sum government transfer can entice some workers to stop working (and entices no one to start working) while the earned income

Explain why a lump sum government transfer can entice some workers to stop working (and entices no one to start working) while the earned income tax credit can entice some people who otherwise would not work to start working (and entices no one to stop working).

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A lump sum transfer is associated with an income effect but not a substitution effect because it doe... View full answer

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