The analysis and discussion on the substitution effect and income effect of leisure in the study of Negative Income Tax

The idea of Negative Income Tax has attracted wide attention not only in academic circles but also in political field since it was put forward. It has been enriched and developed relatively fully and continuously in terms of theoretical research, practical test and policy making so far. But there exits several problems which cannot be ignored in the theoretical research, such as the understanding and analysis of the substitution effect and income effect of leisure. On the basis of the formula of negative income tax and the basic theory of the relative price of leisure, the best choice model about leisure and disposable income of the representative low income individual will be built. And then, the substitution effect and income effect of leisure caused by Negative Income Tax will be explored, discussed and cleared.