Evaluating a Labor Supply Model
A policy analyst is developing a simplified model to predict the number of hours an individual will choose to work per week. The proposed model is a function of the hourly wage rate (w) and the amount of weekly unearned income (I):
Predicted Hours Worked = 35 - 0.5*w + 0.05*I
Based on the standard economic model of an individual's optimal choice between consumption and leisure, evaluate the plausibility of this proposed function. Specifically, critique the signs of the coefficients for w and I.
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Introduction to Microeconomics Course
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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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