Social Policy and Income Distribution: An Empirical Analysis for the Netherlands

Leiden University, Department of Economics Research Memorandum No. 1999.03

37 Pages Posted: 16 Jul 2009

See all articles by Koen Caminada

Koen Caminada

Leiden Law School - Department of Economics

Kees Goudswaard

Leiden Law School - Department of Economics

Date Written: 1999

Abstract

In most OECD-countries income inequality has increased during the last two decades. In this paper, we investigate to what extent changes in the overall distribution of incomes can be attributed to social policy measures. The case for the Netherlands is particularly interesting, because the Dutch welfare state has been reformed rather fundamentally in recent years. The budget incidence analysis indicates that in the period 1981-1996 inequality of adjusted disposable household income increased sharply. The main force behind this phenomenon was a more unequal distribution of market incomes, but social transfers also explain a substantial large part of the rise in inequality. Social security reforms indeed seem to have made the income distribution less equal. The results of a more detailed analysis for 1996 on the redistributive impact of social policy and of specific social programs - using data from an unique income panel survey - can be summarised as follows: - The first five income deciles clearly gain from social security, while the higher deciles loose. Social security causes a reduction in inequality by 26 to 50 percent, depending on the indicator used. - The public old age program and the social assistance program explain by far the largest part of redistribution by the social system, while the disability and unemployment programs do not have strong redistributive effects.

Keywords: Social Policy, Income Distribution (Indices), Taxes and Transfers

JEL Classification: D31, H22, H55

Suggested Citation

Caminada, Koen and Goudswaard, Kees, Social Policy and Income Distribution: An Empirical Analysis for the Netherlands (1999). Leiden University, Department of Economics Research Memorandum No. 1999.03, Available at SSRN: https://ssrn.com/abstract=1434887 or http://dx.doi.org/10.2139/ssrn.1434887

Koen Caminada (Contact Author)

Leiden Law School - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands
++31715277858 (Phone)

HOME PAGE: http://www.law.leiden.edu/organisation/taxlawandeconomics/economics/staff/caminada.html

Kees Goudswaard

Leiden Law School - Department of Economics ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

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