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Topic: Income effect

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  Progressive tax - Wikipedia, the free encyclopedia
It is also argued that people with higher income tend to have a higher percentage of that in disposable income, and can thus afford a greater tax burden (this is the “vertical equity” argument).
The other is an income effect whereby work effort is increased as the worker must work more hours to attain the same wage in the face of higher taxes.
Unlike the opposing income effect and substitution effect of leisure which may make tax progressivity neutral in terms of working hours, the emigration rate can only increase with the top rates of tax.
en.wikipedia.org /wiki/Progressive_tax   (2516 words)

 Consumer theory - Wikipedia, the free encyclopedia
Increasing the income will shift the budget constraint right since more of both can be bought, and decreasing income will shift it left.
The substitution effect is basically a price change that changes the slope of the budget constraint, but leaves the consumer on the same indifference curve.
If the income effect is opposite and stronger than the substitution effect, the consumer will buy more of the good when it becomes more expensive.
en.wikipedia.org /wiki/Consumer_theory   (647 words)

 ECN 515 Notes on Chapter 4
The substitution effect refers to the change in the relative prices of X and Y. (Some economists call the substitution effect the "relative-price" effect.) It has to do with how a consumer can trade a good for another good and how the consumer's utility changes as he or she makes the trade.
The substitution effect is the effect of moving from one point on that indifference curve to a second point on the same indifference curve as the price ratio changes.
The income effect is what happens when we take away the income that we had just given the consumer when we measured the substitution effect.
www.uncp.edu /home/frederick/MBA515/Note-ch04.htm   (625 words)

 The economic impact Staley's has on the Indiana economy can be estimated with the use of IMPLAN, an Input-Output ...
Income impacts are the changes in income received by households as a result of a change in the economy (e.g., household spending of increased income).
The income is the income paid by direct, indirect, and induced output effects associated with farm household spending.
The output, income, and employment impacts of the Staley plant under consideration are reported for the state of Indiana as well as the four-county region of Benton, Carroll, Tippecanoe, and White counties.
www.agecon.purdue.edu /crd/htmlfiles/cornprod.html   (2400 words)

 Chapter 21   (Site not responding. Last check: 2007-09-29)
When a cumulative effect type change in accounting principle is made during the year, the cumulative effect on retained earnings is determined as of the beginning of the year in which the change is made.
Accounting records of prior years usually are inadequate to determine the cumulative income effect of the change or to determine pro forma disclosures for prior years when a company changes to the LIFO inventory method from another inventory method.
The cumulative income effect (net of the tax effect) is reported as a separate item of income between extraordinary items and net income.
www.ic.ucsc.edu /~shep/111b/111BHWK/chap21.html   (1883 words)

 [No title]
Income effect says that as wages increase, you will work less (we are richer so we want to consume more of the goods we like - one of those goods is leisure).
We are going to represent the income effect that results from a change in the before tax wage as a shift in the labor supply curve.
The income effect says that we will work more as a result of having less life time income (we can no longer afford the things we like - one of the things we like is leisure).
gsbwww.uchicago.edu /fac/erik.hurst/teaching/notes3_2003_labormaket.doc   (5377 words)

 Does the Income Effect Argue for Taxes? - Mises Institute   (Site not responding. Last check: 2007-09-29)
Countering the substitution effect is the income effect.
More importantly, though, is the other side of the income effect when it comes to the issue of taxes: namely the spending that taxes are used for.
The only way in which the income effect will be "positive" is if there is government waste, that is, that the government is spending money on things which people in a free society wouldn't have purchased with their own money.
www.mises.org /fullstory.aspx?control=1569   (1002 words)

 [No title]
In that case as income declines due to the price increase your consumption of that good rises (a positive relationship), although it is rarely the case that you actually see a rise in the consumption of a good as income falls, because the substitution effect is moving in the other direction.
The substitution effect can be shown on the budget constraint/utility curve graph as the difference between the old X and the amount of X which would be consumed if the price where to change but you were compensated for the loss income (in the case of a price rise).
The income effect can be shown on the budget constraint/utility curve graph as the difference between X on the old utility curve with the new budget constraint and X with the new utility curve and the new budget constraint.
departments.oxy.edu /economics/olmsted/MICRO/microch41.htm   (1184 words)

 PRC Policy Briefing: How Much Does Additional Income Help Children?
When the income of a family with $15,000 increases by $1,000, the improvement in most outcomes is greater than when the income of a family with $100,000 increases by $1,000.
In one model, I estimated a fairly large effect of income and found that doubling the income of the poorest 20% of families would reduce their teenage daughter's chances of having a baby from 40% to 30%.
This example assumes that we could increase the income of families in a way that did not change their incentive to work or save, and did not reduce the income of families in the upper 80% of the income distribution.
www.jcpr.org /conferences/oldbriefings/additional.html   (1707 words)

 The Effects of Income on Appliances in U.S. Households
The overall picture of household income on a national scale (Figure 1) follows a classic “bell-shaped” curve.  The highest percentage of households is in the $30,000 to $49,999 range.
The 2001 RECS survey also shows an increase by income in whether the televisions are connected to a cable or satellite system (Figure 3).  Even for the lowest income bracket, the percent of households with cable or satellite television is 64 percent.
The percent of households that have refrigerators with an ice/water dispenser increases from 6 percent to 40 percent as the household income increases Figure 16).
www.eia.doe.gov /emeu/recs/appliances/appliances.html   (557 words)

 Effect of Income on Eligibility and Benefit Level   (Site not responding. Last check: 2007-09-29)
WAC 388-450-0162 The department uses countable income to determine if you are eligible and the amount of your cash and food assistance benefits.
Countable income includes all income that must be deemed or allocated from financially responsible persons who are not members of your assistance unit.
When a client's countable income is determined, eighty-five dollars plus one half of the remainder of a client's monthly gross earned income is disregarded as an incentive to employment.
www1.dshs.wa.gov /esa/eazmanual/Sections/INCMeffect.htm   (7058 words)

 [No title]   (Site not responding. Last check: 2007-09-29)
Yet, the household income terms have the expected signs, they are not statistically significant, suggesting that this link is relatively unimportant.
Several of the province dummies are statistically significant as is the effect of the female average wage rate (+).
Income Distribution and Mortality: Cross Sectional Ecological Study of the Robin Hood Index in the United States, British Medicine Journal 312, 1004-1007 Khanna, Sumedha 1995 “Primary Health Care and Maternal Health” in Helen M. Wallace, Kanti Giri and Carlos V. Serrano, eds., Health Care of Women and Children in Developing Countries, Second Edition,.
www.usc.edu /dept/LAS/economics/event/content/IncomeInequalityInvestmentsPrenatalCare.doc   (2082 words)

 Negative Income Tax, by Jodie T. Allen: The Concise Encyclopedia of Economics: Library of Economics and Liberty
If the accounting period is shorter, say a month, as in the welfare system, and income reporting procedures are lax, potential costs and caseloads might be as much as 70 percent higher than those predicted by the annual income-based models used to estimate the costs of FAP and its early successors.
The income accounting and reporting analysis—backed up by an HEW administrative experiment in cooperation with the Denver welfare department—also drew attention to the fact that many negative tax participants cheat on income reports.
But the irregularity of income sources and shifting family arrangements at the lower end of the distribution make it unlikely that the IRS could prevent widespread fraud unless it converted itself into a facsimile of the much-detested local welfare offices.
www.econlib.org /library/Enc/NegativeIncomeTax.html   (2124 words)

 [No title]
In terms of leisure, a wage increase prompts a negative substitution effect and a positive income effect; in terms of hours of work, this is a positive substitution effect and a negative income effect.
The income effect is from HC to HB and is negative.
So, the income effect is positive, which indicates to consume more in the present because real income has gone up and C0 is a normal good.
www.mtsu.edu /~cbaum/242Htest24.doc   (1308 words)

 Perloff Companion Web Site Chapter 5 -- Measuring the Substitution and Income Effects   (Site not responding. Last check: 2007-09-29)
To evaluate the effect of these policies, we want to know the substitution and income effects of a price change of energy.
Because beer is a normal good for Mimi, the income effect reinforces the substitution effect.
If the price of beer rises by 1% but Mimi is given extra income so that her utility remains constant, Mimi would reduce her consumption of beer by less than a tenth of a percent (substitution effect).
occawlonline.pearsoned.com /bookbind/pubbooks/perloff2_awl/chapter5/custom3/deluxe-content.html   (602 words)

  B   (Site not responding. Last check: 2007-09-29)
indifference curves have relatively little curvature, that indifference curve curvature is associated with the substitution effect, and that therefore the law of demand is likely to hold true for substitutes because of the large aubstitution effect.
The association between indifference curve curvature and the size of the substitution effect was established by Hicks.
Although he no longer mentions the elasticity of substitution, the diagram itself shows the magnitude of the substitution effect depending on the degree of curvature of the indifference curve.
www.iaes.org /conferences/past/vienna_47/prelim_program/d80-1/brown.html   (423 words)

 Learn more about Consumer theory in the online encyclopedia.   (Site not responding. Last check: 2007-09-29)
The substition effect is basically a price change that changes the slope of the budget constraint, but leaves the consumer on the same indifference curve.
If the good in question is a normal good, than the income effect will re-enforce the substition effect.
If the good is inferior, then the income effect will lessen the substition effect.
www.onlineencyclopedia.org /c/co/consumer_theory.html   (645 words)

 Introduction to Economics   (Site not responding. Last check: 2007-09-29)
This effect measures the change in the purchase of a good that results from the change in its relative price alone.
The income effect occurs when the dotted budget line (DG) passing through shifts outward to budget line RT.
income effect is negative because when income rises consumption falls.
www.eco.nm.ru /income_substitution.htm   (584 words)

 KSU Economics: Sadia Mariam Malik   (Site not responding. Last check: 2007-09-29)
The effect of a price change can be decomposed into two effects; Substitution Effect and Income Effect.
Suppose that your income is $10 per day and the price of a value meal (drink, fries, and hamburger) is $5.
When the price of a good goes up, the income effect leads you to consume either less of it (fulfilling the law of demand, the good is normal), or more of it (violating the law of demand when the good is inferior).
www.ksu.edu /economics/malik/lect10f00.html   (410 words)

 Income's Effect on Car and Vehicle ownership, worldwide: 1960-2015
The projections are based on an econometrically estimated model that explains the growth of the car/population ratio ("car ownership") as a function of per-capita income; a similar model is used for vehicle ownership.
The model estimations are based on annual data for 26 countries over the period 1960-92; it is the first study to include countries covering the full range of income levels, from lowest to highest.
These income elasticities depend upon per-capita income, ranging from about 2.0, for low- and middle-income levels (that is, ownership grows twice as fast as income), down to zero, as ownership saturation is approached for the highest income levels.
ideas.repec.org /p/cvs/starer/97-33.html   (321 words)

 Economics 240 Fall 1998 Exam 1 Answers   (Site not responding. Last check: 2007-09-29)
Therefore, the income effect of a tax cut and of a welfare program will be the same.
For women, the substitution effect dominates the income effect so we would expect women to increase their labor supply.
The added worker effect says that family members will join the labor force to offset the loss in family income due to unemployment of other members.
www.ilir.uiuc.edu /courses/econ240/econ_240_fall_1998_exam_1answers.htm   (1163 words)

 Search Results for income effect - Encyclopædia Britannica   (Site not responding. Last check: 2007-09-29)
Sharp differences of opinion exist concerning the economic effects of the corporate income tax, partly because it is difficult to determine who actually bears it.
Essay on the 1929 economic slump in the U.S. Analyzes the trends in income and wealth distribution and discusses its effects on the industrial sector and American economy as a whole.
Features information on specialist incomes across regions, physician-population ratios and other statistics, a discussion of the effects of managed care on hiring and income, and a survey of the ten most favorable employment markets for physicians in the U.S. Includes lists of positions available in some specialties.
www.britannica.com /search?query=income+effect   (688 words)

 Consumer theory -- Facts, Info, and Encyclopedia article   (Site not responding. Last check: 2007-09-29)
The consumer will choose the indifference curve with the highest (The quality of being of practical use) utility that is within the budget constraint.
As long as the prices remain constant, changing the income will create a (Something having the property of being analogous to something else) parallel shift of the budget constraint.
Good X is an (additional info and facts about inferior good) inferior good since the amount bought decreased as the income increases.
www.absoluteastronomy.com /encyclopedia/c/co/consumer_theory.htm   (658 words)

 [No title]   (Site not responding. Last check: 2007-09-29)
(b) She is worse off—her real income is lower—she will reduce consumption of normal goods including air trips home; this is the income effect.
The entire effect is due to an income effect.
If the income effect of a wage change dominates the substitution effect we know that a wage increase will cause additional consumption of leisure and less work...
econ.bu.edu /huynh/CaseFair7thEd/SolutionsCF-Ch5.doc   (1538 words)

 [No title]   (Site not responding. Last check: 2007-09-29)
Deficits will definitely increase in the long run if the income effect dominates the substitution effect.
But, if income effect dominates, the fall in I will be larger than the increase in C. In the long run, the labor supply curve will definitely shift right — on net - if the substitution effect dominates the income effect.
If substitution effect dominates, before tax wages would fall (but after tax wages would definitely rise!) Y would not change in the short run if consumers are Ricardian PIH consumers (assume consumers expect G to be constant forever).
gsbwww.uchicago.edu /fac/erik.hurst/teaching/m_quiz8_2004_ans.doc   (495 words)

 NewsFromRussia.Com Can money buy happiness? Study says yes!   (Site not responding. Last check: 2007-09-29)
Their research is focused on whether the income effect on happiness results largely from the things money can buy (absolute income effect) or from comparing one's income to the income of others (relative income effect).
Because of the relative effect, continued income growth within rich countries such as the US is irrelevant to overall happiness, according to Mr Firebaugh, reports Scotsman.
Their research is focused on whether the income effect on happiness results largely from the things money can buy (absolute income effect) or from comparing one's income to the income of others (relative income effect) More details...
newsfromrussia.com /science/2005/08/15/61291.html   (1560 words)

 uExpress.com: Scott Burns by Scott Burns -- (04/03/2001) THE INCOME EFFECT
Although it lacks the drama of the better known "wealth effect" -- the tendency of consumer spending to rise when people feel richer and to fall when people feel poorer -- the Income Effect will be having an impact on our economy in coming months.
With a sinking economy and public expectations that the Federal Reserve will reduce interest rates still further, the Income Effect is likely to get worse, not better.
Learn what your marginal federal income tax rate is. Most people don't know what bracket they are in, so they don't know how much spending power they are actually losing.
www.uexpress.com /scottburns?uc_full_date=20010403   (684 words)

 [No title]
In the static model a higher wage rate generated a substitution effect as well as an income effect.
The second retiree will reduce hours of work as he faces only income effect The third retiree will increase or decrease hours of work depending upon which effect dominates - the substitution effect or the income effect.
In this example substitution effect dominates and he works more Overall the theory suggests that repealing SSET is unlikely to substantially increase labor supply among retirees.
web.syr.edu /~ankumar/teaching/eitc.doc   (641 words)

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