In debates surrounding the reform of social security, some economists argue that welfare systems should move away from targeted assistance. They propose a system of universal benefits, where payments or services—such as child benefit or healthcare—are provided to all citizens regardless of their income or wealth level.
Proponents argue that universalism fosters social cohesion, removes the administrative costs of assessing household resources, and eliminates the 'poverty trap' where individuals face high effective marginal tax rates as they transition into work. Critics, however, argue that universal benefits are highly expensive and represent an inefficient allocation of state funds, as substantial resources are transferred to wealthy households who do not require financial support.
Define the term 'universal benefits' (Extract C, paragraph 1) .
