The Targeting of Social Security: a Tax Reform Approach

Jean Hindriks ()

Discussion Papers from University of Exeter, Department of Economics

Abstract: Income-based targeting (or means-testing) reduces social security benefits as income rises. This form of targeting entails a well-known incentive distortion; the prospect for the recipients of losing part of their benefits if they were to earn more can deter them to work harder. In this paper, we argue that targeting is more than a simple redistribution device that takes from the rich to give to the poor. The question involves starting from a particular tax-transfer scheme in force, and asking whether everybody would like to depart from it. Adopting a general environment, we derive simple conditions under which there exist such directions of change and we identify these directions. Specializing further the model and using numerical calculations we estimate the effects of inequality and tax evasion on the desirability of targeting.

Keywords: SOCIAL SECURITY; TAXATION; TESTING (search for similar items in EconPapers)
JEL-codes: H21 H26 H53 (search for similar items in EconPapers)
Pages: 14 pages
Date: 1999
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: The Targeting of Social Security: A Tax Reform Approach (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:exe:wpaper:9918

Access Statistics for this paper

More papers in Discussion Papers from University of Exeter, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Jingnan (Cecilia) Chen ().