Tax and social security systems in terms of living standars

Mihaela Mirzenco

Master's thesis

Abstract:

This thesis comprises 4 parts. In the first one we describe the theoretical aspects of taxes and social security contributions systems. Next sub-section from the first part focuses on defining and measuring human living standards. Second part comprises several hypotheses that we test, divided by cases (3), as we have several scenarios to be examined. In the third part the methodology used for designing the research is described. Starting from the research design, it explains the data collection and provides reasoning for that. The last sub-section considers data analysis. The 3rd part of the thesis might be considered as the most valuable one, as it comprises the main analysis, i.e. taxation trends, social security contributions and HDI levels and 2 regression analyses. In the last part of the thesis we discuss the results gained after performing all the tests described in the methodology part. The study performed is based on 28 EU member states for the period 2007-2016 using graphical representations and carrying out 2 regression analyses. The first model comprises overall tax as % of GDP as explanatory variable and the Human Development index (living standards) as resulting variable, where we test and define the relationship between them. The second model examines impact of social security contributions as % of GDP instead of taxes as in the first case. Another two relationships tested are related to taxes, SSC and individual component parts of HDI, i.e. education (knowledge) and life expectancy (health) indexes. However, we do not include all the testing steps in the empirical part but interpret only the correlation between them. The main findings confirm the existence of a dependency between taxes, social security contributions and living standards as well as between SSC and knowledge and health indexes (parts of HDI). The first dependencies are defined as negatively influencing the standards of life. Thus, as increase in the level of taxes, social security contributions lead to a reduction in the level of human development reflected through HDI index. However, in the second case we detect a positive correlation between SSC and knowledge, health indexes and no impact of taxes on these variables.

Abstract:

This thesis comprises 4 parts. In the first one we describe the theoretical aspects of taxes and social security contributions systems. Next sub-section from the first part focuses on defining and measuring human living standards. Second part comprises several hypotheses that we test, divided by cases (3), as we have several scenarios to be examined. In the third part the methodology used for designing the research is described. Starting from the research design, it explains the data collection and provides reasoning for that. The last sub-section considers data analysis. The 3rd part of the thesis might be considered as the most valuable one, as it comprises the main analysis, i.e. taxation trends, social security contributions and HDI levels and 2 regression analyses. In the last part of the thesis we discuss the results gained after performing all the tests described in the methodology part. The study performed is based on 28 EU member states for the period 2007-2016 using graphical representations and carrying out 2 regression analyses. The first model comprises overall tax as % of GDP as explanatory variable and the Human Development index (living standards) as resulting variable, where we test and define the relationship between them. The second model examines impact of social security contributions as % of GDP instead of taxes as in the first case. Another two relationships tested are related to taxes, SSC and individual component parts of HDI, i.e. education (knowledge) and life expectancy (health) indexes. However, we do not include all the testing steps in the empirical part but interpret only the correlation between them. The main findings confirm the existence of a dependency between taxes, social security contributions and living standards as well as between SSC and knowledge and health indexes (parts of HDI). The first dependencies are defined as negatively influencing the standards of life. Thus, as increase in the level of taxes, social security contributions lead to a reduction in the level of human development reflected through HDI index. However, in the second case we detect a positive correlation between SSC and knowledge, health indexes and no impact of taxes on these variables.

Keywords

Tax systems, Social security systems, Living standards, Human Development Index

Keywords

Tax systems, Living standards, Social security systems, Human Development Index

Language used: English

Date on which the thesis was submitted / produced: 24. 10. 2018

Thesis defence

• Date of defence: 11. 6. 2019
• Supervisor: Jana Tepperová
• Reader: Stanislav Klazar

Vysoká škola ekonomická v Praze

Master programme:
Finance and Accounting