The Econometrics of Piecewise-Linear Budget Constraints
This is a summary of an article by Robert Moffitt (1986): Often in Public Economics, we come across budget constraints which are piecewise-linear. Some examples are studies of: the negative income tax, Social Security program, food stamp program, Aid to Families with Dependent Children (AFDC), and unemployment insurance. Wrinkles to the traditional piecewise linear budget…