Research Paper No. 755

LABOUR SUPPLY AND WELFARE WITH PIECEWISE LINEAR BUDGET CONSTRAINTS: AN INTRODUCTION

by

JOHN CREEDY 

JULY 2000

Department of Economics. University of Melbourne. Melbourne Victoria 3010 Australia

 

CONTENTS

  1. Introduction
  2. Labour Supply
  3. The Budget Constraint
  4. Utility Maximisation
  5. Welfare Changes
  6. Special Cases of Direct Utility Functions
    1. Cobb-Douglas Utility
    2. The CES Utility Function
  7. Some Numerical Examples
    1. Two Tax Structures
    2. Labour Supply Curves
  8. The Distribution of Earnings
  9. Conclusions

 

 

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