"Economic theory suggests that the availability of a NIT might lead some to work less than they would in its absence. According to theoretical models, individuals’ hours of work are determined by the marginal wage rate and nonwage income (Keeley, Robins, Siegelman, & West, 1978). By providing nonwage income, a NIT allows individuals to work fewer hours and still receive an income. Individuals whose earned income falls at the threshold (or guarantee level), for example, could stop working entirely without losing any income. In economic terms, this is the “income effect”: a guaranteed income makes leisure more affordable and incentivizes a reduction in work hours. Because labor supply is a function of nonwage income and the marginal wage rate, however, there is a countervailing “substitution effect” observed when the benefits associated with the increase in income provided by an additional hour of work are greater than the benefits accruing from an hour of leisure. The substitution effect is activated by increases in the wage rate and by MTRs of less than 100% on NIT payments. As the MTR decreases, the financial benefit of working an additional hour increases. Because a NIT has income and substitution effects that work in opposite directions and vary in magnitude according to the income threshold, MTR, and individuals’ preferences, the theoretical economic implications are ambiguous."