The welfare trap theory asserts that taxation and welfare systems can jointly contribute to keep people on social insurance

Social insurance

Social insurance is any government-sponsored program with the following four characteristics:* the benefits, eligibility requirements and other aspects of the program are defined by statute;...

 because the withdrawal of means tested

Means test

A means test is a determination of whether an individual or family is eligible for help from the government.- Canada :In Canada means tests are used for student finance , and "welfare" . They are not generally used for primary education and secondary education which are tax-funded...

 benefits that comes with entering low-paid work causes there to be no significant increase in total income. An individual sees that the opportunity cost

Opportunity cost

Opportunity cost is the cost of any activity measured in terms of the value of the best alternative that is not chosen . It is the sacrifice related to the second best choice available to someone, or group, who has picked among several mutually exclusive choices. The opportunity cost is also the...

 of returning to work is too great for too little a financial return, and this can create a perverse incentive

Perverse incentive

A perverse incentive is an incentive that has an unintended and undesirable result which is contrary to the interests of the incentive makers. Perverse incentives are a type of unintended consequences.- Examples :...

 to not work.
The term used to describe this concept varies depending on country.