| Resumen: |
This report examines the incentives that people face as they encounter the opportunities and constraints that social protection policies and institutions create in the labor market. These institutions are cogs in a country s broader public revenue and expenditure machine, and from the perspective of most market participants, they are inseparable from personal income taxation. Indeed, in many high-income countries, the objectives of social protection are increasingly pursued directly and explicitly through income taxation channels, as the growing preference for earned income tax credits and other so-called “negative income taxes” in many high-income countries attests. Although social insurance specialists are fastidious in distinguishing statutory “social contributions” from other mandated payments, these programs all entail a ration on the consumption of services—either more or less than people would consume if left to their own devices—provided by a single or tightly limited set of providers. This ration gives any mandated participation in a benefit plan— even one that is actuarially fair—an element of taxation, creating incentives for people to avoid and evade. |
