a dollar for dollar reduction in benefit is essentially a 100% tax rate, surely a substantial deterrent to working for many people. No worker who values leisure would ever take a job earning less than $12000, since his effective wage is zero in the range. Similarly, it is unlikely that a worker would ever choose to earn slightly more than $12000 since it would require substantial effort but increase his take-home pay to only slightly above the government guarantee. Hence, the government guarantee and the$1 for $1 benefit reduction system will lead to many potential workers choosing supply no worker effort. The new system will encourage these workers to increase their work effort by effectively reducing their tax rate by 50%