In response to a negative income tax,the substitution of leisure for income could be great enough to reduce total income.

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Under a negative income tax, individuals who earn below a certain income threshold would receive supplemental income from the government. This can create a disincentive to work, as individuals may choose to reduce their work hours or leave the workforce altogether in order to receive the supplemental income. As a result, there may be a significant substitution of leisure time for income, leading to a reduction in total income earned.

In Response to a Negative Income Tax,the Substitution of Leisure