Suppose that the spouse of the primary earner in the household is considering joining the labor force.The spouse currently cares for two children and,if employed,would earn $20 per hour for 40 hours per week.The cost of child care would be $15 per hour for 40 hours per week.Assume that child care is tax deductible and that child care at home is NOT imputed and taxed.Assume that the spouse is indifferent between working and staying home except for the financial impact.What would be the marginal tax rate such that the spouse is indifferent between entering the labor force and providing child care at home?

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The Answer of Suppose that the spouse of the primary earner in the household is considering joining the labor force.The spouse currently cares for two children and,if employed,would earn $20 per hour for 40 hours per week.The cost of child care would be $15 per hour for 40 hours per week.Assume that child care is tax deductible and that child care at home is NOT imputed and taxed.Assume that the spouse is indifferent between working and staying home except for the financial impact.What would be the marginal tax rate such that the spouse is indifferent between entering the labor force and providing child care at home?

Suppose That the Spouse of the Primary Earner in the Household