children $18,000 in income. This is represented on the graph by a horizontal line at $18,000. With this

program, each time the mother earns $1,000, the government will deduct $1,000 of its support. Table 15.3

shows what will happen at each combination of work and government support.

FIGURE 15.3 The Poverty Trap in Action The original choice is 500 hours of leisure, 2,000 hours of work at point A,

and income of $16,000. With a guaranteed income of $18,000, this family would receive $18,000 whether it

provides zero hours of work or 2,000 hours of work. Only if the family provides, say, 2,300 hours of work does its

income rise above the guaranteed level of $18,000—and even then, the marginal gain to income from working many

hours is small.
364 15 • Poverty and Economic Inequality

Amount Worked (hours) Total Earnings Government Support Total Income

0

500

0

$18,000

$18,000

$4,000

$14,000

$18,000

1,000

$8,000

$10,000

$18,000

1,500

$12,000

$6,000

$18,000

2,000
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