The policy brief "European Pillar of Social Rights and Social Harmonization in the Eyes of Latvian Stakeholders" by Ieva Moore was prepared within a research project entitled “SocialBoost – effective measures of social harmonization as a boost for employability in times of demographic changes”, which received funding under the Nordic Council of Ministers’ Programme for NGOs in the Baltic Sea Region.
New FREE Policy Brief2017 30-01
Gaming the System: Side Effects of Earnings-Dependent Benefits by Anna Zasova (BICEPS) and Vitalijs Jascisens (SITE). Today policy makers in developing and middle-income countries face tremendous challenges in combating various forms of tax evasion. Increasingly it is proposed to tie social security benefits to the reported income and in this way increase tax compliance incentives. We use administrative data from Latvia to study generous childcare benefits, which depend on the reported wages in the pre-childbirth period. Our analysis reveals pronounced wage growth shortly before the childbirth, which we rationalize by the legalization of previously undeclared wages. Obtained results show that the wage growth is temporary and lasts only until the end of the period, which is taken into account when calculating parental benefits.