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The ‘Maschinenbeitrag’ Debate in Europe: In Search of the Optimal Financing Base for Social Security
Published online by Cambridge University Press: 20 January 2009
Abstract
In several West European countries the way in which social security is currently financed by payroll contributions is widely criticised for its negative effects on employment and on the future stability of social security revenue. The calculation of the contributions on a broader assessment base, that is, value-added, might be a plausible alternative. Since human labour is increasingly replaced by technology, could the latter's value-added be used for financing social insurance? This article reviews the major empirical studies on the economic effects of such a rebasing to a so-called ‘Maschinenbeitrag’. It shows that the economic and budgetary benefits are very uncertain; therefore a shift towards a fiscalisation of social security financing is suggested as an alternative line of policy.
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- Copyright © Cambridge University Press 1988