2.1. 2.2. Suppose a worker can work up to 3,000 hours per year at a wage of $10 per hour. There is an earned income tax credit (EITC) such that for the rst $5,000 in earnings, the government pays 40 per dollar of wages earned. For the next $3,000 of earnings, the credit is held constant. After that, the credit is reduced at a rate of 20 per dollar earned. When the credit reaches zero, there is no more EITC. Draw the budget constraint that reects the EITC for this worker. Label all values on the vertical axis. On the graph, note the effective post-EITC wage per hour for each segment of the EITC budget constraint. Consider a policy change that reduces the EITC rate from 40 to 25 for the rst $5,000 in earnings. How will hours of work be affected by this policy change? Explain using income and substitution effects, as well as the empirical evidence