Research On The Employment Incentives Of Minimum Living Security System

The minimum living standard security system is the most important institutional innovation in the field of social assistance under the socialist market economy. Since the inception of the minimum living security system, the target of this system is to protect the basic livelihood of the members of society. In line with internationally accepted concept of social assistance, the minimum living security system is based on the household income survey-based cash transfer payments mode. The system has become a basic public service of the Chinese Government, reflecting the fundamental responsibility of the Government to protect its residents’right of survival. The release of the current minimum living allowance using the compensation method based on different incomes, this method makes one person whose average household income is less than the minimum living standard to achieve the minimum standard of living. But using this method, to some extent, had a negative incentive on the employment of subsistence allowances group. Firstly, my research analysis the macro data and make a empirical investigation to demonstrate the necessity of the employment incentives of the minimum living standard security system.Then on the basis of the previous exploration and practical experience around the world, this research will propose a designed method to improve the employment incentives of the minimum living security system. This design will encourage the person who has the ability to work relay on their own efforts to get out of poverty. What is more, it will have a great significance on effectiveness and fairness of the minimum living standard security system.The design of the employment incentives of the Minimum living standard security system is learned from the idea of negative income tax system. Which means levy a regressive tax rate on the income of the group whose income is less than the minimum living standard. In a word, the research of the employment incentives of the Minimum living standard security system is to give more allowance to the group whose income is less than the Minimum living standard, and he still goes to work. The amount of this allowance is based on the income of the person who has the ability to work and goes to work. In order to demonstrate the feasibility of this design of the system, this research use the actuarial model to estimate the changes in number of the group who receive the subsistence allowances and financial needs, while setting up the employment incentives of the minimum living standard security system. According to the estimated results, the financial needs of the employment incentives of the minimum living security system accounts for a low level in fiscal revenue. Therefore, the conclusion of this research is that the employment incentives of the minimum living security system are both necessary and feasibility. This research suggests that our government should adjust the method of the payment approach of the minimum living allowance. Then increase the amount of subsidies for the group who has the ability to work and relay on their own efforts to get out of poverty. With all these methods, the employment incentives will improve the fairness and effectiveness of the minimum living standard security system.