Social Security Contributions Research Articles

ФІНАНСОВІ АСПЕКТИ ВРАХУВАННЯ НОВИХ ЕКОНОМІЧНИХ РИЗИКІВ У ДІЯЛЬНОСТІ ПІДПРИЄМСТВ

Анотація. Економічний розвиток підприємств у світі та в Україні 2020 року та на майбутнє дедалі більше залежатиме від урахування нових економічних ризиків, серед яких уже сьогодні доцільно виділити такі: кліматичні, епідеміологічні (передусім — коронавірусні), деглобалізаційні, протекціоністські, популістські, нерівність у доходах. На тлі коронавирусної пандемії і породженої нею економічної кризи найбільше постраждав сектор вітчизняного малого та середнього бізнесу, орієнтований на надання офлайн-послуг. Фактично попит на послуги індустрій громадського харчування, розваг, туризму, гостинності, а також beauty-індустрії і непродовольчого ритейлу в умовах карантину впав у рази. При цьому необхідність платити заробітну плату, податки, соціальні внески, орендні платежі, кредити банкам і контрагентам за постачання та інші послуги зберіглася. Водночас усі види бізнесів, які не встигли перейти на надання товарів і послуг в онлайн-форматі або дотримуються бізнес-моделей, пов’язаних виключно з наданням персональних офлайн-послуг, схильні до ризику банкрутства в майбутньому. Наслідком карантину стане економічна криза, а значить і скорочення купівельної спроможності, зміна споживчої поведінки. Загалом, відбулося порушення традиційної сезонності продажів, змінюються тенденції внаслідок падіння доходів споживача. Водночас прискореного розвитку дістають цифрові послуги: електронна комерція, платіжні системи та послуги замовлення і доставки он-лайн. Також серед інших економічних ризиків у діяльності підприємств особливої уваги набуває необхідність визначення та оцінка фінансово-кліматичних ризиків, які виникають унаслідок обмежень, що накладаються міжнародними організаціями та окремими країнами на бізнес. Відповідно, підприємства, які здійснюють кліматично небезпечну діяльність, повинні розраховувати свої фінансові втрати на перспективу, якщо вони будуть продовжувати подібний бізнес. Проблемою є й той факт, що поки фінансово-кліматичні ризики та інші нові економічні ризики достатньо не вивчені та не систематизовані, а також не досліджено їхній вплив на фінансовий стан підприємств як у світі, так і в Україні. Ключові слова: нові економічні ризики, підприємство, деглобалізація, протекціонізм, економічний популізм, економічна нерівність, Україна. Формул: 0; рис.: 2; табл.: 0; бібл. 14.

Bottom Incomes and the Measurement of Poverty and Inequality

Incomes in surveys suffer from various measurement problems, most notably in the tails of their distributions. We study the prevalence of negative and zero incomes, and their implications for inequality and poverty measurement relying on 57 harmonized data sets from the Luxembourg Income Study and Economic Research Forum databases, covering 12 Mediterranean countries over the period 1995–2016. This paper explains the composition and sources of negative and zero incomes, and assesses the distributional impacts of alternative correction methods on poverty and inequality measures. It finds that the main source of negative disposable incomes is negative self‐employment income, and that high tax, social security withholding, and high self‐paid social security contributions account for negative incomes in some countries. Using detailed information on expenditure, we conclude that households with negative incomes are typically as well off as, or even better off than, other households in terms of material well‐being. On the contrary, zero‐income households are found to be materially deprived. Adjusting poverty and inequality measures for these findings can alter these measures significantly.

Investigating if the Financial Markets Performance Affects the Shadow Economy: Additional Evidence From EU Countries

The shadow economy also known as the informal or unobserved or underground economy, is a phenomenon that affects not only emerging markets and developing countries but also advanced economies. In general, this undeclared economic activity is hard to measure given its hidden nature in addition to its relation with unlawful activities. Nevertheless, apart from the legal aspects that may appear, shadow economy has negative implications in terms of tax revenue and social security contributions for the nations. To this end, an extensive literature has explored the measurement issues as well as the root causes of this phenomenon proving that the underground economy constitutes a significant portion of the overall economy in a number of countries. This paper tries to investigate the relationship between the shadow economy and the financial markets. This paper employs a number of panel data regression models to detect the association between the financial market metrics and the shadow economy (as a% of GDP). The outcome of this paper is that it finds evidence that increased market capitalization, GDP per capita and FDI as well as low unemployment and inflation rates contribute to low levels of shadow economy. This can be of value to policy makers and the competent authorities of the countries that wish to find means to contain their shadow economy.

Social insurance law and corporate financing decisions in China

This study investigates whether and how social security contributions affect corporate financing decisions. Treating the 2011 Social Insurance Law in China as a quasi-natural experiment, our difference-in-differences framework utilizes two-dimensional variations: initial social security contribution rates across firms (i.e., high vs. low) and year (i.e., before and after 2011). We find that more social security contributions cause firms to issue less debt in their capital structure, particularly firms with more severe labor market frictions, greater labor intensity, unhealthier financial status, tighter financial constraints, and those located in low-income areas with less developed financial systems and greater fiscal pressure. Mechanism tests show that firms’ operating leverage, bank credit default risk, and profitability volatility increase, while the supply of trade credit decreases, which is consistent with the financial distress hypothesis. The findings suggest that firms tend to choose conservative financing policies to mitigate the likelihood of financial distress caused by increasing social security contributions.

Scaling up Climate Mitigation Policy in Germany

Germany has set national greenhouse emissions targets of a 65 percent reduction below 1990 levels by 2030 and net zero emissions by 2045, along with various sectoral emissions goals. To achieve these targets, the government has introduced multi-pronged policy measures, including a national emissions trading system (ETS), which complements the ETS at the EU level. This paper shows the substantial variation in the price responsiveness of emissions across sectors and thus prices implied by sectoral targets. It proposes the following measures to help Germany meet emissions targets with greater certainty and cost effectiveness: (i) further strengthening carbon pricing, for example through automatically rising price floors for the national ETS after 2026; (ii) harmonizing carbon pricing to reduce cross-sector differences in marginal abatement costs; and (iii) introducing feebates (revenue neutral taxsubsidy schemes) to reinforce incentives at the sectoral level. The paper also studies the distributional impact of higher carbon pricing and suggests that reducing social security contributions can mitigate the regressive direct impact of higher carbon pricing on lowerincome households. Concerns with carbon leakages and firms’ competitiveness are best addressed through agreeing on an international carbon price floor.

DIRECTIONS OF TRANSFORMATION OF THE TAX COMPONENT OF THE ENTREPRENEURIAL ENVIRONMENT FOR THE DEVELOPMENT OF THE MARKET OF INNOVATIVE TECHNOLOGIES IN UKRAINE

Topicality. The question of how to stimulate innovation processes in the Ukrainian economy is natural. On the one hand, budget opportunities in our country at this stage of development are very limited, on the other hand,  objective pattern is the reduction of state involvement in innovation as we approach the stage of commercialization in the life cycle of innovation. In this regard, when building an effective model of innovation development and state innovation policy, the focus should not be on direct budget financing, but on indirect methods that correspond to the essence of a market economy and competition, are more predictable and transparent for business entities. relatively lower administrative costs, help reduce the impact of the corruption component. The traditional tool of indirect methods of state regulation of innovation processes is tax regulation, the definition of directions of transformation of which are the most relevant for the development of the market of innovative technologies.Aim and tasks. The purpose of the article is to identify problems and areas for improving the tax component of the business environment for the development of the market of innovative technologies in Ukraine.Research results. The main trends in the use of tax instruments to stimulate research and development (R&D) by economically successful countries are identified. The global trends in the distribution of tax benefits for R&D depending on the size and type of economic activity of business entities are presented. The main problems that hinder the development of the market of innovative technologies in Ukraine are identified. Based on a comparative analysis of the structural elements of the price of products manufactured using traditional and innovative technologies, the prevalence in the structure of the price of products manufactured using innovative technologies, the newly created value is identified. It is proposed to reduce the tax burden on the social security contributions and profits of businesses that implement innovative technologies by reducing the rate of single social contribution to the payroll of employees who implement innovative technologies, to establish an investment tax credit and the tax regime of the Patent Box. The comparative characteristics of the volume and incremental schemes of investment tax credit are presented and the expediency of introduction of the volume scheme of investment tax credit in Ukraine is substantiated, which will stimulate the increase of qualified expenses of entrepreneurs for R&D.Conclusion. The tax instruments that will help reduce the tax burden on entrepreneurs, who implement innovative technologies, are described in this article. The introduction of tax incentives will help reduce the costs of entrepreneurs until they make a profit, will stimulate the reinvestment of profits in new innovative technologies and patent activity of business entities.

IMPACT OF THE ECONOMIC FACTOR ON THE SOCIAL SECURITY SYSTEM

The economic factor and its strong influence is determined mainly by the funds received from social security contributions in the social security system, by the number of persons employed, by the pension costs and the amount of the maximum social security income, as well as by the average monthly salary. Funds allocated to pensions are a major economic factor that has a major impact on the social security system. The more money is spent on pensions, the greater the negative financial effect on the social security system. The unfavorable demographic trends and the aging of the population in Bulgaria have led to higher pension expenditures. The purpose of the report is to show the great importance of the economic factor as an essential element of the social security system. The funds allocated for pensions in the social security system are essential. As the population ages, pension costs increase, so does the burden on the social security system. The current social security system is based on three pillars - mandatory pension insurance, mandatory supplementary and supplementary voluntary pension insurance. Compulsory pension insurance is in fact a continuation of the previously operating pension system, based on the pay-as-you-go system, with modifications to somehow link people's contributions to the pensions received. The insured pay social security contributions, which are distributed and paid in the form of a pension to the disabled. Compulsory supplementary pension insurance is the second pillar of the system and is based on the so-called funds or capital principle. The contributions of the insured persons are transferred to pension funds, which invest the resources in investment instruments. As it has already become clear, the three-pillar model in Bulgaria is a mix of the cost-covering and capital models. The problems in these models quite naturally have an impact on the chosen three-pillar model in Bulgaria. The main idea behind the cost-covering model is that working young people contribute to the pension system and these contributions are used to pay the pensions of the currently disabled. The model can be considered as a kind of social transfer of resources between generations. Young people work and pay a "social tax", and the disabled receive an income (pension) that provides them with consumption. The results show that more and more funds are needed for the social security system, which are obtained through grants from the national budget.

Labor Market Size and Firms’ Social Security Contribution Rate in China

As an important component of operating costs, excessive social security contribution reduces the willingness and contribution rate of small- and medium-sized firms. In China, one third of firms do not participate in social security, and the other firms generally have the problem of evasion and arrears. Specifically, Feng (2013) finds that the contribution rate of Chinese industrial firms is uneven, and the average rate is only 10.82%, far lower than the legal rate. How to explain the variation in social security contribution rate among firms? Is social security contribution the burden of business activities? Answering these questions helps to understand the motivation of firms’ social security contribution, bolster up the design of social security collection system, and provide theoretical and practical reference for the “cost reduction” of supply-side structural reform.This paper investigates the relationship between labor market size (LMS) and firms’ social security contribution rate (SSCR) based on the profit maximization framework. Given the dual effects of SSCR on firms’ labor productivity and financial distress cost, optimal SSCR is achieved when marginal income equals to marginal cost. As LMS expands, decreasing search cost and compensating differentials for job loss risk increase optimal SSCR. Further, the empirical results measuring LMS by industrial employment capacity find that LMS significantly increases firms’ SSCR belonging to the same industry, especially for firms with serious financial constraints, high unemployment cost and private ownership. In addition, increasing SSCR significantly deteriorates firms’ performance, suggesting that the cost effect plays a leading role.Our findings demonstrate that the behaviors of social security by firms are subject to industrial environment, suggesting that it is necessary to account for the issue when policymakers adjust economic policies. Our paper contributes to the literature in three aspects: First, from the perspective of endogenous social security contribution, we explore the impact of labor market size on firms’ social security contribution, which enriches the labor “thick market” theory and relevant literature of firms’ social security contribution. Second, we build a theoretical framework to explain the endogenous logic of labor market size affecting firms’ social security contribution. Third, understanding the logic of firms’ social security contribution provides a micro basis for the reform of social security collection and contribution system.

Social Security Contribution (CAS) Owed by Natural Persons that Obtain Revenues from Independent Activities

This article presents a series of theoretical and practical concepts regarding the social security contribution owed by natural persons that obtain revenues from independent activities (production, retail, rendering of services, liberal professions). Throughout the year 2021, tax payers carry out the evaluation in order to establish a potential payment obligation of this contribution, and the completion of the revenues earned, which is the base of establishing the final obligation regarding CAS, will be carried out in the next year, by filling Chapter I of the single tax return. The annual base for the calculation of the social security contribution cannot be lower than the level of 12 gross national minimum wages effective at the date when the single tax return is filled.

Equity implications of climate policy: Assessing the social and distributional impacts of emission reduction targets in the European Union

The implementation of determined or ambitious environmental policies may lead to regressive distributional impacts, disproportionately affecting low income population groups. The imposition of additional taxes on energy products affects negatively low-income households that face funding scarcity, increasing the risk of energy poverty. In this study, the state-of-the-art general equilibrium model GEM-E3-FIT is significantly expanded to represent ten income classes in all EU Member States. Each income class is differentiated by income sources, savings, and consumption patterns. We use the new modelling capabilities of GEM-E3-FIT to quantify the distributional impacts of European Union's ambitious emission reduction targets, in particular exploring their effects on income by skill and on energy-related expenditure by income class. The analysis shows that the transition to climate neutrality may increase modestly inequality across income classes, with low-income households facing the most negative effects. However, using carbon tax revenues as lump-sum transfers to support household income and as reduced social security contributions will increase employment and reduce income inequality across households in EU countries.

MSA, The French Agricultural Social Protection scheme

As the second largest social protection scheme in France, the Agricultural Social Mutuality (fr. Mutualité sociale agricole, MSA) is responsible for providing all compulsory social security coverage for the entire agricultural population and its beneficiaries, whether it concerns health, family, retirement, work-related accidents or occupational diseases. The MSA is responsible for collecting social security premiums and contributions, but also unemployment insurance and conventional contributions for many organizations1. It differs from other French social security schemes in that it provides a one-stop shop for individuals and companies to deal with a single contact person for all matters relating to their social protection throughout their lives. In addition to its basic mission, it carries out a policy of health and social action adapted to its population and is also in charge of occupational medicine and the prevention of professional risks in the agricultural sector. It can support all actions aiming to promote the coordination and the offer of care in rural areas2. As a mutualistic organization, the MSA is the expression of a responsible and supportive democracy at the service and in proximity of the rural world. The representativeness of its elected delegates, its knowledge of the territories and their stakeholders, and its role as a professional agricultural organization give it an indispensable expertise that allows it to work for the cohesion of the territories while guaranteeing access to quality public services. This expertise also enables it to be present abroad as part of formalized exchanges in European networks and international cooperation projects.

Gesundheitsausgaben und die Rolle des Alters: Eine detaillierte Analyse der Kosten von Überlebenden und Verstorbenen

Germany faces various socio-political challenges due to its ongoing ageing population. Significant increases in social security contributions are widely expected. The impact of ageing on healthcare expenditure is acontroversial issue. Experts agree that costs for end-of-life care account for asignificant part of total healthcare expenditures. For ameaningful forecast, detailed information on healthcare costs differentiated by survivors and decedents is necessary. Extensive data are hardly available for Germany. The aim of the analysis was therefore to describe healthcare costs in the statutory health insurance. The basis for the calculation is billing data from the statutory health insurance "AOK Niedersachsen" (Lower Saxony). Persons who survived or died in 2017 were included in the analysis. Average costs were standardised. The data of 2.46 million survivors and 34,307 decedents were analysed. The average annual healthcare costs were 2756 € for survivors and 21,830 € for decedents in the last year of life. The average healthcare costs for survivors increase with age whereas costs for decedents are highest in younger age groups and decline with increasing age. Adetailed analysis of end-of-life costs shows an exponential increase of costs in the last three years of life with the highest costs in the quarter before death (10,577 €). The analysis gives adetailed overview on the structure of healthcare expenditure in the statutory health insurance and can serve as abasis for future forecasts regarding healthcare expenditure.

Directions for the Reconstruction of the Tax System in Poland – a Growth‑Enhancing Proposal

The paper aims to present directions for the growth‑enhancing reconstruction of the tax system in Poland. It presents a diagnosis of the main strengths and weaknesses of that system. Based on this diagnosis and a review of the literature, the authors propose a package of recommendations whose introduction would be conducive to economic growth. The recommendations include: shifting the burden of taxation from income, in particular low labour income, to consumption; exempting low earners from a part of social security contributions; the introduction of the possibility for local governments to increase the PIT-free allowance above the centrally set base amount; the unification of the basis for the PIT, National Health Fund and Social Insurance Institution contributions; the elimination of differences in contributions for different types of contracts on the basis of which work is performed; the extension of one‑off amortisation to all machine investments; and the elimination of sectoral taxes.

Taxation of the Self‑employed in Poland and other EU Countries – a Comparative Analysis

The article aims to compare the taxation of the self‑employed in Poland and other EU countries. We show that, for years, Poland has been at the forefront of EU countries with the highest self‑employment rates. Our analysis indicates that many people in Poland chose the status of self‑employed, guided by tax optimization. Due to large differences in the burden of income tax and social security contributions of people working full‑time and choosing self‑employment, there are strong incentives to move from employment to fictitious self‑employment. Our study shows that this significantly affects the revenues of the state budget and social security fund in Poland.

The Impact of Family and Child-Allowances on Income Inequality in Poland. Gini Decomposition by Income Sources

Abstract Research background: This paper analyses how different income sources affect the level of inequality in Poland, with focus on the role of family and children related allowances in decreasing income inequalities in 2015–2017. Therefore, the study has focused on the various subgroups of households with children. Purpose: The paper is aimed at examining the extent to which family and children related allowances affect household income inequality and identifying whether they affect inequality in various groups of households in the same way. Methodology: The study was carried out on micro-data gathered by Eurostat. To examine the extent to which different income components affect income inequality, we decompose the Gini coefficient according to the method introduced by Lerman and Yitzhaki. Results: Our study revealed that for most households with children, the inequality-reducing effect due to family and children related allowances increased in 2017 compared to 2015. However, despite the additional child-raising benefit under the “Family 500+” programme, income taxes and social security contributions remained by far the most important factor in reducing household income inequalities in Poland. Novelty: To our knowledge, no study has yet attempted to assess the extent to which family and child-allowances affect income inequality based on real data. The present analysis takes a step towards filling this gap. Unlike other studies based on microsimulation, in this paper we made use of the representative micro-data derived from the EU-SILC study.

Nutritional Status of Non-Institutionalized Adults Aged over 65. Study of Weight and Health in Older Adults (PYSMA).

Background. A significant increase in the prevalence of malnourishment, obesity, and sarcopenic obesity has been observed in developed countries over the last few decades. In Spain, this especially happens in populations over 65 who are not institutionalized. Differences in lifestyle, medication, and economic capacity partially explain this increase. Objective. To study the nutritional status of a population of 65 year-olds and subjects who are not institutionalized, in the Cádiz region (Spain). Methods. Observational, transversal study carried out on 2621 subjects who are 65 years old and over, with a direct weight and height measurement, in 150 pharmacy offices from 44 locations. A mobile application was designed for homogeneous data collection in all the pharmacy offices. The data required from all subjects was gender, age, postal code, social security contribution regime, if the patient lives alone, type of food consumed as the main meals, level of physical activity, polypharmacy, weight, and height. Results. The prevalence of overweight and obesity amounts to 82.2% of the population (43.2% overweight and 39% obese). We found an inverse relationship between the prevalence of overweight and obesity with carrying out physical activity and having full dinners. Conclusion. We identify the need to reinforce the messages to the elderly aimed at maintaining adequate physical activity and assessing the quality and quantity of dinners, as well as reducing, as much as possible, the treatments that may lead to weight gain.

New Problems Caused by the COVID-19 Pandemic – Income Taxes and Social Security Contributions (An Overview)

A pluralism of legal sources, as well as the parallel application of these sources in respect of employment income, complicate the area of cross-border work. During the COVID-19 pandemic, new problems have arisen for these workers, which are identified and analysed in this article. The OECD has addressed some of these issues concerning taxation; however, the application of the social security system has not been discussed to date. In the concluding section of this article, further problems expected to arise in the aftermath of the pandemic are identified.

Taxation and Public Spending Efficiency: An International Comparison

This paper evaluates the relevance of taxation for public spending efficiency in a sample of OECD economies for the period of 2003–2017. We start by computing the data envelopment analysis (DEA) scores, and then we evaluate the role of tax structure in explaining these public efficiency scores, using a reduced-form panel data regression specification. Our main findings are as follows: inputs could be theoretically lower by approximately 32–34% and expenditure efficiency is negatively associated with taxation. More specifically, direct and indirect taxes negatively affect government efficiency performance, and the same is true for social security contributions.

Social security contributions distribution and economic activity

This paper studies the macroeconomic and welfare implications of the distribution of the social security tax between employees and employers using a general equilibrium framework. We calibrate a dynamic general equilibrium model for the average of OECD countries and find that increasing the share of social security contributions paid by employers has a positive effect on economic activity and welfare. Whereas raising the employer’s share increases the labor cost for firms and reduces the equilibrium gross wage, conversely, workers’ net labor income increases, increasing employment, output, and welfare. The response of the economy to the change in the distribution of social security contributions between employees and employers depends on how the total labor tax wedge changes, which is also affected by the labor income tax and the consumption tax, as distortionary effects from one tax are not independent from the other taxes driving wages’ purchasing power.

The effect of the 2008 employment support programme on young men’s labour market outcomes in Turkey: Evidence from a regression discontinuity design

AbstractActive labour market policies (ALMPs), such as subsidies for wages, social security contributions (SSCs) and employment, are one of the most important tools of countries’ efforts to tackle unemployment. The Turkish government launched the employment subsidy programme in 2008, aiming to decrease unemployment and to encourage formal employment by subsidizing the SSCs for relatively disadvantaged groups. The aim of this study is to investigate the effects of the 2008 policy on various labour outcomes. The entire analysis relies on micro‐level panel data derived by the Survey of Income and Living Conditions over the period of 2008–2011. Young men aged between 18 and 29 years are eligible to the programme. To infer causality, we apply a regression discontinuity design analysis using as the cut‐off point those who are aged 30 years. The findings show that the policy of 2008 had a positive impact on employment and the probability of being employed in the formal sector and working full time.