ABSTRACT
This chapter explains the state of thinking in 1976 which serves as the basis for subsequent comparison. It deals with a number of matters of definition. Since 1976 several different strands of project have developed semi-independently, each tackling a separate problem and/or a separate group of workers. In the standard textbook model of labour supply it is assumed that there is a single independent individual and two homogenous commodities. A person’s objective budget constraint includes their entitlement to state transfer earnings including the implied tax rate on means-tested transfers. This means that the net marginal wage should reflect the loss of transfers where appropriate. The effort level will determine their effort payment which will enter into their observed hourly wage rate. The chapter attempts to control for tastes directly by inserting variables designed to measure need and job satisfaction.
