The relationship between taxes, benefits and life satisfaction: Evidence from European countries

Oecd

No 39, OECD Papers on Well-being and Inequalities from OECD Publishing

Abstract: This paper examines how tax-benefit systems relate to subjective well-being in European countries using both micro- and macro-level data. At the micro level, net transfers are strongly and positively associated with life satisfaction among the bottom half of the income distribution, while net taxes have only weak or slightly negative associations for the top income quintile. At the aggregate level, the tax burden is negatively associated with life satisfaction, but this relationship is weaker, or even offset, in countries with high government effectiveness. Overall, inclusive tax-benefit systems can enhance subjective well-being when combined with good governance.

Keywords: governance; income distribution; life satisfaction; redistribution; subjective well-being; tax benefit system (search for similar items in EconPapers)
JEL-codes: D63 H11 H24 H53 I31 (search for similar items in EconPapers)
Date: 2026-06-01
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Persistent link: https://EconPapers.repec.org/RePEc:oec:wiseaa:39-en

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