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Benefits and Wages 2007

OECD Indicators

image of Benefits and Wages 2007

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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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 In addition, means-tested benefits, such as social assistance or housing benefits, are reduced or withdrawn as earnings increase and can thus lessen the financial reward of taking up a new job or working longer hours.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.

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