If welfare benefits equal the poverty gap for each household in poverty,then the

Question

Quizplus · Accepted Answer

When welfare benefits exactly equal the poverty gap for each household, any additional income earned by the household would directly reduce their welfare benefits by the same amount, effectively creating a 100% marginal tax rate on additional earnings. This is because the additional income reduces the poverty gap, which then reduces the welfare benefits dollar for dollar.

If Welfare Benefits Equal the Poverty Gap for Each Household