Excel files last updated: March 2013

Benefit generosity

How does benefit income compare to earned income?  Net replacement rates, calculated taking tax-benefit regimes into account and considering the family as a whole, show the proportion of in-work income that is maintained when someone is unemployed, and provide important insights when considering both benefit generosity and incentives to work:

During the initial phase of unemployment, 2001-2011 For long-term unemployed, 2001-2011 Over a five-year period following unemployment, 2001-2011   An alternative perspective on benefit generosity is provided by Gross replacement rates which compare unemployment benefits received when not working to wages earned when employed   Gross replacement rates, uneven years from 1961 to 2011

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Work incentives

Does it pay to work?  When taking up a job or working more hours, a significant portion of these new earnings can be "taxed away", through imposition of income taxes combined with reductions in benefit entitlements. If such effective tax rates are high, they can create barriers to employment, thereby "trapping" families in low income situations:

Income adequacy

To what extent do tax-benefit regimes alleviate poverty risks? One way of looking at how countries' systems perform in this respect is to show how the level of minimum income benefits compare to poverty thresholds in terms of median household incomes. Another way is to ask to which extent minimum or low-wage earnings can raise family income above the poverty threshold :

Some net income estimates and their components – taxes and social security contributions paid, benefits received and labour earnings - for different family types and labour market situations, are now also available on OECD.STAT.

 

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Contacts

For further information: contact Tax-Benefit.Models@oecd.org

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