Service Contract under the title: Rethinking Jordan’s Benefit System: Aligning Labour Market Supply Incentives and Social Protection.

The purpose of this assignment is to finalise analyses specific to the relationship between labour market supply and existing social protection sub-systems with the aim of articulating a series of design recommendations in a policy brief format. The technical work should quantify the labour market disincentives in the current benefits schedule (in terms of impacts on the extensive and intensive margins) and draw on the future initiatives articulated in social protection strategy documents to recommend design improvements, articulating the advantages to formalization and labour market participation.

Specifically, the proposed study shall include:

• An analysis of the labour supply disincentives created by the current system of Personal Income Tax, Social Security contributions, NAF transfers and minimum wages.
• A discussion of more gradual avenues to taper off benefits and introduce contributions, including tax credits.
• A discussion of alternative options to extend social protection that ameliorate these disincentives, with a specific focus on older persons, persons with disabilities and taxpayers with children.  This includes exploring options such as scaling up coverage, or through establishing alternative mechanisms.  This also includes exploring possibilities for targeting such as affluence testing and pension testing.
• A costing of the different options, and – depending on the level of access to data – an assessment of their potential implications on disposable income, inequality and labour market considerations.
• A discussion of the financing implications and modalities of different options.