One factor thought to contribute to the increase in social assistance recipients is an increase in the ratio of social assistance benefits to earnings for low income individuals. Using a graph like the one in Figure 12.8, discuss how a decline in the wage rate can result in an individual, initially working and not receiving welfare, deciding to quit their job and take up social assistance.

Figure 12.8

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Income per month 500 G D X M P $500 VF T Hours of leisure per month