Hostname: page-component-586b7cd67f-tf8b9 Total loading time: 0 Render date: 2024-11-29T13:31:18.223Z Has data issue: false hasContentIssue false
  • English
  • Français

The Distributional Impact of Current Income Transfer Policies in the Netherlands*

Published online by Cambridge University Press:  20 January 2009

Kees Goudswaard  and
Philip De Jong
Get access Rights & Permissions [Opens in a new window]

Abstract

The large and generous income transfer system in the Netherlands has caused increasing tax burdens and deficits in a period of sluggish economic growth. Confronted with this situation, the present Dutch government is trying to cut back the scope of the system substantially by reducing benefit levels. The distributional impact of this policy is simulated on a micro data set. It is found that the effects of the transfer cuts on overall income distribution are not very large: from 1983 to 1986, inequality as measured by the Gini or the Theil index increases by 3 per cent. However, inequality between working and non-working people as measured by the Theil index between groups is simulated to increase by as much as 50 per cent. On the other hand, people can be hypothesized to increase their work effort when benefit levels are lowered. Using a behavioural model, it is estimated that from 1983 to 1986 the working population might increase, ceteris paribus, by 0.5 per cent yearly as a consequence of the transfer cuts. This would imply second-round distributional effects mitigating the increase in overall inequality by one-third.

Type
Articles
Information
Journal of Social Policy , Volume 14 , Issue 3 , July 1985 , pp. 367 - 383
Copyright
Copyright © Cambridge University Press 1985

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Danziger, S., Haveman, R. and Plotnick, R. (1981), ‘How income transfer programs affect work, savings, and the income distribution’, Journal of Economic Literature, 19:3, 975–1028.Google Scholar
Danziger, S. and Smolensky, E. (1983), ‘Abrupt changes in social policy: The redistributive effects of Reagan's budget and tax cuts’. Paper prepared for the International Institute of Public Finance conference, Budapest, 22–26 08.Google Scholar
Halberstadt, V., Haveman, R.H., Wolfe, B.L. and Goudswaard, K.P. (1984), ‘Inefficiences in public transfer policies in Western industrialized democracies’, in Hanusch, H. (ed.), Public Finance and the Quest for Efficiency, Wayne State University Press, Detroit, pp. 189–208.Google Scholar
Herziening van het stelsel van sociale zekerheid (1982–1983), Tweede Kamer, The Hague, 17 475, nr 6, pp. 1–65.Google Scholar
Le, B. Blanc (1979), Op weg naar een economische theorie van de sociale zekerheid, Sociaie-Zekerheidsreeks onder redactie van G.M.J. Veldkamp, nr 4, Kluwer, Deventer, Netherlands.Google Scholar
Lee, L.F. (1979), ‘Identification and estimation in binary choice models with limited (censored) dependent variables’, Econometrica, 47:4, 977–96.Google Scholar
Lydall, H.F. (1979), ‘Some problems in making international comparisons of inequality’, in Monorey, J.R. (ed.), Income Inequality, Trends and International Comparisons, Lexington, Mass., pp.21–41.Google Scholar
Mustert, G.R. (1976), Van dubbeltjes en kwartjes, Voorlopige Wetenschappelijke Raad voor het Regeringsbeleid, The Hague.Google Scholar
Odink, J.G. (1983), ‘Inkomensherverdeling door belastingen en andere overdrachten’, Maandschrift Economie, no. 47, pp.66–73.Google Scholar
Pen, J. and Tinbergen, J. (1977), Naar een rechtvaardiger inkomensverdeling, Elsevier, Amsterdam.Google Scholar
Reynolds, M. and Smolensky, E. (1977), Public Expenditure, Taxes, and the Distribution of Income, Academic Press, New York.Google Scholar
Smolensky, E., Pommerehne, W.W. and Dalrymple, R.E. (1979), ‘Post-fiscal income inequality: A comparison of the United States and West Germany’, in Monorey, J.R. (ed.), Income Inequality, Trends and International Comparisons, Lexington, Mass., pp.69–85.Google Scholar
Studiegroep Begrotingsruimte (1983), Beheersbaarheid van de Collectieve Uitgaven, Staatsuitgeverij, The Hague.Google Scholar
Wolfe, B.L., de Jong, P.R., Haveman, R.H., Halberstadt, V. and Goudswaard, K.P. (1984), ‘Income transfers and work effort: The Netherlands and the United States In the 1970s’, Kyklos, 37:4, 609–37.Google Scholar