A company raises its hourly wage for all employees. A standard economic model, which only considers an individual's trade-off between consumption and free time, predicts that this will cause most employees to work more hours. However, the company observes that many employees with young children do not increase their work hours. Which of the following best explains this discrepancy?
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Ch.3 Doing the best you can: Scarcity, wellbeing, and working hours - The Economy 2.0 Microeconomics @ CORE Econ
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Work-Leisure Decisions with Family Constraints
Two individuals, Alex and Ben, have identical preferences for consumption and leisure, and they work at the same company for the same hourly wage. Alex has no children. Ben has two young children and has access to only limited and expensive childcare options. Based on this information, which of the following outcomes is most likely?
Impact of Childcare Costs on Labor Supply
A government subsidy that makes childcare more affordable is unlikely to alter a parent's work-leisure decision because their underlying preferences for consumption and free time have not changed.
Limitations of the Work-Leisure Model: Family Factors
A government introduces a new policy providing free, high-quality, full-day childcare for all children under the age of five. From the perspective of a work-leisure choice model that accounts for family needs, what is the most probable impact of this policy?
A company raises its hourly wage for all employees. A standard economic model, which only considers an individual's trade-off between consumption and free time, predicts that this will cause most employees to work more hours. However, the company observes that many employees with young children do not increase their work hours. Which of the following best explains this discrepancy?
A city government wants to implement a policy to encourage parents with preschool-aged children to increase their participation in the workforce. Based on economic principles that consider how family needs influence work-leisure decisions, which of the following policies is LEAST likely to achieve the goal of increasing parents' work hours?
Evaluating Policies to Increase Labor Force Participation
An individual's circumstances can significantly alter their decision about how many hours to work. Consider the following four scenarios for a person who has the same job and hourly wage in each situation. Arrange these scenarios in the correct order, from the one most likely to result in the individual working the most hours per week to the one resulting in the fewest hours per week.