Figure 2
From: Using the EU-SILC to model the impact of the economic crisis on inequality
Budget Constraint Diagram for tax-benefit systems. Note: 1. We assume here a single earner married couple with 2 children, aged X and Y, with no direct housing costs for simplification. The main earner has a wage rate of two thirds the average wage. 2. The budget constraints have deflated by CPI to reflect purchasing power. Wages have been assumed to grow in line with average wage growth. 3. The ages of children used in the hypotethical family are 1 and 6. yyABCD – reflects the budget constraint for year ABCD (a and b).