Labor-Leisure Budget Line

[@curubodzn2700]

Would it be possible to contact you with a specific question regarding leisure constraint? I’ve been given an inequality but can’t seem to evaluate the variables and plot the constraint :/ it regards a progressive tax and how different tax brackets affect the budget line. I can’t link the image of the inequality here sadly

[@jorgeballester5990]

muy buena explicaciones, felicitaciones.

[@maxbegun3898]

at 6:31 equation should be c=320-20L

[@wasiqr7607]

at 5:13 shouldnt the budget constraint equation be: C= 240 -10L

[@EconomicsinManyLessons]

Yes. Thank you!

[@danclarke7553]

How would overtime and taxes be built into this? Thanks!

[@EconomicsinManyLessons]

With a tax, which flattens the budget line, you should muliple the wage by (1 - tax). Assume 24 hours in day, nonlabor income is zero, wage is $10, and tax rate is 20%. C = (1 - 0.2)wage(24 - L) = 8(24 - L). Overtime pay will create a kink in the budget line, steepening it. Suppose overtime pay (time and half) kicks in after 8 hours of work. With my last example (but let's ignore taxes), the slope of the budget line will equal from -10 (or -wage) at 0 to 8 hours of work and equal -15 (-wage x 1.5) at 8 to 24 hours of work. There is a kink in the budget line at 8 hours of work or 16 hours of leisure.

[@danclarke7553]

@@EconomicsinManyLessons you’re a hero! Thank you 🙏🏼

[@yutikasingh5443]

​@@EconomicsinManyLessons what will happen in the case of progressive taxation?

[@curubodzn2700]

Hi