Contribution evasion is a serious problem for social security financing in
many countries. A mixture of strategies may be most effective in reducing t
he underpayment and nonpayment of mandatory social security contributions b
y employers and workers. Contribution evasion can be reduced by changes in:
(a) the incentives inherent in the design of social security systems, (b)
employer, worker and governmental attitudes toward compliance, (c) administ
rative procedures that improve the efficiency of contribution collection by
government or reduce the cost to workers and employers of compliance, and
(d) macroeconomic policies that maintain low inflation and provide for low
unemployment with stable growth. (C) 2001 Elsevier Science Ltd. All rights
reserved.