Question

18.which of the following would be the most useful source of time series variation with which to identify the effect of income guarantees on labor supply? a. an abrupt increase in the income guarantee over a short time b. a steady increase in the income guarantee over a long time c. no change in the income guarantee over time d. an expansion of the earned income tax credit e. a decrease in childbearing over time

Answer 1

A steady increase in the income guarantee over a long time would be the most useful source of time series variation to identify the effect of income guarantees on labor supply. Therefore, the correct option is B.

Step-by-step explanation:

In order to identify the effect of income guarantees on labor supply, the most useful source of time series variation would be a steady increase in the income guarantee over a long time. This is because a steady increase allows for a consistent comparison and analysis of the labor supply response to the income guarantee. Abrupt increases or decreases (options A and E) may lead to confounding factors and less reliable conclusions. Option D, an expansion of the earned income tax credit, may also introduce other factors that could complicate the analysis.