Unemployment and related welfare benefits help prevent those without work from falling into poverty but can at the same time reduce the incentive to work; this is one of the main dilemmas of social policy. Launched in 1998, this series (formerly entitled Benefit Systems and Work Incentives) addresses the complicated interactions of tax and benefit systems for different family types and labour market situations and their impact on household incomes and financial work incentives.
This new edition provides detailed descriptions of all cash benefits available to those in and out of work as well as the taxes they were liable to pay in 28 OECD countries during both 2001 and 2002. Total household incomes and their components are calculated for a range of family types and employment situations. The results allow detailed cross-country comparisons of the characteristics of individual policy instruments as well as their combined impact on household incomes. They are used to examine financial incentives to work, either part-time or full-time, as well as the extent to which social benefits prevent income poverty.
No. pages: 142
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Summary of chapters
How generous are social transfers available to employees, unemployed persons and their families? Under what circumstances do families qualify for these benefits?
Chapter 1 examines different countries’ strategies for providing financial support for people in a range of circumstances. It compares the generosity and entitlement rules of unemployment benefits, family-related transfers and minimum income benefits of “last resort” and examines the structure of innovative schemes designed to encourage employment. Policy rules are presented in a way that facilitates comparison across countries and sheds light on how interactions between different types of benefits and taxes can reinforce or weaken the policy effectiveness of individual schemes.
Illustration: Unemployment Insurance Benefits in OECD countries. [TABLE 1.2]
What is the income situation of families across countries? How do specific policy measures impact on household resources?
Chapter 2 compares the net effects of taxes and benefits and examines the effectiveness of social benefits in supporting family incomes. It presents calculated tax burdens and benefit entitlements for a range of family situations and earnings levels. One section of the chapter focuses on income poverty showing to what extent benefits of “last resort” are able to reduce poverty gaps and how much people need to earn in order to escape poverty.
Illustration: Net income for employees earning the statutory minimum wage. [FIGURE 2.7]
What is the financial payoff of securing a job or increasing work efforts?
Chapter 3 derives a range of work incentive measures by comparing household net incomes in different employment situations. The financial consequences of moving between different work situations are assessed for three types of transition: employees becoming unemployed, unemployed persons returning to work, and a change in working hours for those already in employment.
Illustration: Net replacement rates over a 5-year period following unemployment. [FIGURE 3.1]
Recent policy developments and trends
Chapter 4 surveys recent tax-benefit policy initiatives across OECD countries. It discusses trends in reforms as they apply to the working-age population and summarises important changes since the previous edition of Benefit and Wages which covered the period up to 1999.
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Further work by the OECD Social Policy Division: www.oecd.org/els/social
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Average and Marginal Effective Tax Rates Facing Workers in the EU. A Micro-Level Analysis of Levels, Distributions and Driving Factors (OECD Social, Employment and Migration Working Papers No. 19)
Indicators of Unemployment and Low-Wage Traps (OECD Social, Employment and Migration Working Papers No. 18) + Annexes 1 & 2 in separate document
Take-up of Welfare Benefits in OECD Countries: A Review of the Evidence (OECD Social, Emploment and Migration Working Papers No. 17)
Taxing Wages 2003/2004 (Excerpts)
Benefits and Wages: OECD Indicators 2002