Suppose that a direct payment welfare program provides a base payment of $10,000 per year to poor families. At the same time, however, the value of the base payment is reduced by $1.00 for every $1.00 of income the family earns. How would such a program affect a household's incentive to work? Would the effect on work incentives be different if the base payment were reduced by only $0.50 for each dollar of income earned?