Benefits and Wages

1999-1339 (online)
1995-400X (print)
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Unemployment and related welfare benefits help prevent those without work from falling into poverty but at the same time, reduce the incentive to work.  Launched in 1998, this periodic report (formerly entitled Benefit Systems and Work Incentives) addresses the complicated interactions of tax and benefit systems for different family types and labour market situations. It presents a set of tables facilitating cross-country comparisons of tax-benefit systems and compares the incomes of a range of families in and out of work and describes the incentives to work, either part-time or full-time, across OECD countries. Supersedes Benefit Systems and Work Incentives.

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Benefits and Wages 2007

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Benefits and Wages 2007

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13 Dec 2007
9789264032651 (PDF) ;9789264023789(print)

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Launched in 1998, the latest edition of this series (formerly entitled Benefit Systems and Work Incentives) provides detailed descriptions of all cash benefits available to those in and out of work as well as the taxes they are liable to pay across OECD countries. A special chapter also compares childcare costs across countries and the financial work incentives faced by parents of young children. Using the OECD tax-benefit models, total household incomes and their components are calculated for a range of family types and employment situations. The results 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 for those without a job. This volume presents results for 2005 and earlier years.
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  • Executive Summary
    Policymakers attempt to accomplish three broad goals in designing benefit systems: support the living standards of low-income families, especially when children are present; encourage work and economic self-sufficiency; and keep costs to the taxpayer low. These goals often are in conflict with one another, so trade-offs have to be made. This publication analyses the effects of taxes and benefits on incomes of working-age individuals and their families in 29 OECD countries1 for the year 2005, and it describes changes since 2001. Detailed country-specific information about tax and benefit systems, and a regularly updated selection of key indicators calculated from the OECD Tax-Benefit Models are available on the Internet at This volume focuses on comparisons across countries, and the sort of questions it answers include: what benefits do unemployed people in different countries receive and how does this compare to the net income they receive while in work? Does the amount of benefit depend on how long someone is unemployed? How much extra does the tax and benefit system give to families with children? How much does a jobless person need to earn before he or she is better off than they would be if they stayed on benefit? Apart from unemployment benefits, what other government policies impact on financial work incentives and what is their net effect?
  • Elements of Tax-Benefit Systems
    This chapter provides an overview of the institutional features of tax-benefit systems including the eligibility and entitlement rules governing different types of social benefits, their tax treatment and the way in which part-time or casual earnings influence benefit amounts. The information presented here sheds light on the structure of benefit systems and provides a background for understanding the quantitative effects of taxes and benefits on household incomes discussed in later chapters. More detailed descriptions on countries’ tax-benefit systems can be found in country chapters available at
  • Tax Burdens, Benefit Entitlements and Income Adequacy
    What levels of household income do the tax-benefit rules discussed in the previous chapter translate to? And how important are individual tax-benefit instruments in determining household resources? This chapter compares tax burdens and benefit entitlements for a range of family situations and earnings levels to compare the resources available to families in different circumstances. The focus is on the lower end of the wage scale – below and up to average earnings – where work incentive problems typically are most relevant.
  • Financial Consequences of Employment Transitions
    Benefit systems that partly compensate for lost earnings are characterised by a tradeoff between income protection and maximising the financial gain from work. This is most apparent in the case of unemployment benefits. In addition, means-tested benefits, such as social assistance or housing benefits, are reduced or withdrawn as earnings increase and can thus lessen the financial reward of taking up a new job or working longer hours. While benefits provide income during unemployment, taxes and social security contributions can adversely affect work incentives by reducing the net value of earnings when taking up work. This chapter quantifies the balance of these effects. It measures the income differentials between different work situations in order to determine the financial consequences of moving between them.
  • Can Parents Afford to Work?
    Parents perform a wide range of tasks to ensure the well-being of their children and the family as a whole. While, between them, most parents face similar sets of core tasks, they adopt very different coping strategies responding, in part, to the household’s specific social and economic circumstances. To an important extent, the economic context of household behaviour is shaped by government policies which seek to further a range of different, and sometimes, conflicting objectives.
  • Tax and Benefit-System Reforms
    The story of reforms to the tax and benefit system in OECD countries in recent years has been dominated by two main objectives: to strive to increase incentives to work, and to increase family incomes, especially where children are present. Neither objective is new, but whereas in previous years other objectives have also played a prominent role (for example, attempts to reduce the fiscal cost of the benefit system) these two objectives now explain a very large proportion of reform efforts. And the dilemma facing policymakers is that the two objectives are potentially in tension with one another.
  • Annexes A, B, and C
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