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Strategy for establishing a link between the earned income tax credit and social insurance subsidy program

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  • Strategy for establishing a link between the earned income tax credit and social insurance subsidy program
  • Kim, Jae-Jin; Lee, Haywon
  • Korea Institute of Public Finance


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Title Strategy for establishing a link between the earned income tax credit and social insurance subsidy program
Similar Titles
Material Type Reports
Author(English)

Kim, Jae-Jin; Lee, Haywon

Publisher

Seoul:Korea Institute of Public Finance

Date 2012-12
Series Title; No Research Paper / 12-01
Pages 80
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Economic Administration
Social Development < Social Welfare
Holding Korea Institute of Public Finance

Abstract

In this study, we examine policy recommendation for linking the EITC(Earned Income Tax Credit) and the “Durunuri Social Insurance Subsidy Program." The former was first implemented in 2008 to support the workingpoor who are excluded from the social safety net, and the latter program was first introduced in July, 2012 to expand social insurance coverage to low-paid workers who are currently uncovered. The main purpose of linking these two programs is not only to relieve the financial burden of the government, but also to enhance the efficiency of both programs. In many developed countries, subsidizing social insurance contributions of low-skilled workers and the long-term unemployed is a popular policy option to increase financial incentives to work, although the effectiveness of the program differs by target, aim and coverage of the program. In general, studies find that subsidizing social insurance contribution of employers increases demand for low-skilled labor while generating substantial costs, such as deadweight loss, substitution cost and displacement effect. (The rest omitted)