This working paper assesses the impact on, and challenges to, the ability of welfare systems with different financing mechanisms to cope with the crisis. Additionally, it analyses how the crisis (stimulus measures, austerity packages) contributes to changing the structure of financing systems. It shows that social systems that rely primarily on contribution-based financing are more conducive to the achievement of stable public finances throughout a recession than tax-based systems, insofar as the former focus on keeping employment stable because it is their main source of public revenue.

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