# Welfare trap | | The **Welfare trap** theory asserts that taxation and welfare systems can jointly contribute to keep people on social insurance because the withdrawal of means-tested benefits that comes with entering low-paid work causes there to be no significant increase in total income. According to this theory, an individual sees that the opportunity cost of getting a better paying job is too great for too little a financial return, and this can create a perverse incentive to not pursue a better paying job. | |-|-| | | wikipedia:: [Welfare trap](https://en.wikipedia.org/wiki/Welfare_trap) |