For a non-participant in the labour market, an increase in non-labour income: a) will have an unknown effect because the income and substitution effects oppose one another b) will increase the reservation wage and leave the individual as a non-participant c) will have a large leisure inducing substitution effect d) will reduce hours worked because it is a pure income effect e) will reduce the reservation wage and (depending how big the reduction is) may coax the individual into the labour market

For a non-participant in the labour market, an increase in non-labour income: a) will have an unknown effect because the income and substitution effects oppose one another b) will increase the reservation wage and leave the individual as a non-participant c) will have a large leisure inducing substitution effect d) will reduce hours worked because it is a pure income effect e) will reduce the reservation wage and (depending how big the reduction is) may coax the individual into the labour market

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter16: Labor Markets

Section: Chapter Questions

Problem 16.2P

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