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This new edition presents a detailed assessment of the features and consequences of tax and benefit policies in 29 OECD countries. It provides an update of the main work incentive indicators and considers income adequacy in relation to commonly-used poverty cut-offs. This includes a look at the employment income that people in different countries need to earn in order to escape income poverty. Results are compared to earlier years in order to assess the effects of recent tax/benefit reforms. A special chapter calculates parents' out-of-pocket childcare costs and asks whether, given these costs, parents of young children can "afford to work".
A new tax-benefit calculator allows readers to perform simple calculations themselves and find out how tax-benefit policies affect family incomes and work incentives in different countries..
No. pages: 205
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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 1.1)
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 2.5)
What is the financial payoff of securing a job or increasing work efforts?
Chapter 3 updates 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 3.2)
Can parents afford to work?
Finding a suitable balance between work and family life is not an easy task for parents faced with conflicting demands. Public support for good-quality childcare plays a crucial role in helping parents reconcile their work and family commitments. But inconsistent or poorly implemented social and fiscal policies can create additional barriers to employment or raising children – or both. The effectiveness of policies in this area is the subject of a special chapter in this publication (Chapter 4). Adopting the parents’ perspective, it analyses two related questions. First, how much does childcare cost? Second, given these costs, can parents of young children afford to work?
Illustration: Cost of centre-based care (lone parent with two children) (figure 4.3a)
Recent policy developments and trends
Chapter 5 surveys recent tax-benefit policy initiatives across OECD countries. It discusses trends in reforms as they apply to the working-age population and important changes since the previous edition of Benefit and Wages which covered the period up to 2002.
Encouraging employment - OECD countries balance benefits, wages and taxes
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Benefits and Wages: Country specific information
Benefits and Wages: OECD Indicators