Cross-National Comparisons of Tax and Benefit Systems and Economic Behavior

Question from tommlu

Hi. I’m an undergraduate in my senior year, and I was wondering if you could any topics for an economic thesis, particularly in the area of taxation. Let me say that I am unconvinced that taxes has an effect on economic growth in the short run or the long run. There’s no doubt that taxes create a disincentive to work, but is that effect really so large as to decrease overall economic activity (productivity, demand, income,). If you could offer any suggestions for me, I would love to hear them. Thanks.


To me, the more interesting question is the long-run question. Here, I think there is something very useful you could do in an undergraduate thesis. Tax and benefit systems of different countries are complex enough that it is not easy to research all the details to compare how different tax and benefit systems lead to different effects. (I have seen this done more comprehensively for tax and benefit policies that would affect retirement decisions than for tax and benefit policies for younger workers).  Doing thorough case studies of the tax and benefit systems of various countries and looking for the predicted effects would be a great service. For example, do many of the French take August off because of the details of their tax and benefit system? Is there something about Germany’s tax code and benefit code that helps explain why so few German women work? Don’t forget advanced Asian economies, such as Japan.

You would have the most impact if you concentrate first and foremost on providing clear summaries of how the tax and benefit codes of different countries work and what the details are. I know I would learn a lot from that. I think most economists would.

What I am suggesting might have been impossible before Google Translate, but nowadays, your computer will give you a translation that is probably good enough to figure out most of what is going on.