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