Benefit Systems and Work Incentives 1999

Unemployment and related benefits help prevent those without work from falling into poverty but at the same time reduce the incentive to work; this is one of the main dilemmas of social policy. The Benefit Systems and Work Incentives series, started in 1998, addresses all the complicated interactions of tax and benefit systems for many different family types and labour market situations. This year's edition includes a section that describes the changes that occurred over the two-year period 1995-1997 affecting benefit systems and work incentives in OECD countries. We have also included some detailed calculations which illustrate the uses of net income calculations and the resulting marginal effective tax rates. Furthermore, Greece has now been included amongst the countries in our study. The series is a valuable tool used to compare the different benefits made available to those without work (net of taxes) with potential in-work incomes. This differential, in some countries, is very small. Furthermore, the reduction of certain benefits, as earnings rise, sometimes reduces the attraction of moving up the job ladder. Consequently unemployed families, who face these disincentives, may become locked in unemployment and are at risk of exclusion from the labour market.