Transfers reduce work effort because they reduce the opportunity cost of leisure.

Question

Quizplus · Accepted Answer

Transfers provide individuals with additional income that they can use to purchase more leisure time, thereby reducing the opportunity cost of that leisure time as the individual is not sacrificing as much income to take time off. This can lead to a decrease in work effort as individuals may choose to work fewer hours or take longer periods of time off.

Transfers Reduce Work Effort Because They Reduce the Opportunity Cost