work is likely to offer low wages and reduce government assistance. Consider a program to fight poverty that

works in this reasonable-sounding manner: the government provides assistance to the those who need it, but

as the recipients earn income to support themselves, the government reduces the level of assistance it

provides. With such a program, every time a person earns $100, they lose $100 in government support. As a

result, the person experiences no net gain for working. Economists call this problem the poverty trap.

Consider the situation a single-parent family faces. Figure 15.3 illustrates a single mother (earning $8 an hour)

with two children. First, consider the labor-leisure budget constraint that this family faces in a situation

without government assistance. On the horizontal axis is hours of leisure (or time spent with family

responsibilities) increasing in quantity from left to right. Also on the horizontal axis is the number of hours at
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