Summary (English)

This paper addresses the role and relevance of social contributions in social security systems and argues in favour of its maintenance. It provides an overview of the effects of social security contributions on employment and informality, both from an economic theory and an empirical evidence perspective. Results shows that social security contributions do not represent a significant factor in determining employment and informality, as well as that there are no significant employment or formalization gains in reducing social security contributions rates.   At the same time, any reduction in social security contributions creates an effective loss in government revenue, thus limiting the fiscal space for implementing social protection policies that aim to reduce poverty and inequality.