Sharp rise in purchasing power since 1977, inequality stable in recent years

In the period 1977-2020, the purchasing power of the Dutch population increased by 58 percent. The sharpest rise occurred from 1999-2009 (22 percent). This is the outcome of research conducted by Leiden University and Statistics Netherlands (CBS).

The report (in Dutch) shows that the period 1977 to 1990 saw income inequality rise, but in the following two decades it remained more or less stable. This stability was due in the most part to tax reforms. For example, the tax and social insurance contributions burden dropped from 44 percent in 1985 to 38.2 percent in 2019. As a result, people have more disposable income. Payments such as the state pension and supplementary pension have also had a significant redistribution effect, see Dutch NOS item.

Inconsistencies repaired

Professor Koen Caminada of Leiden University was the project leader for this publication. ‘The most important thing we did was to repair inconsistencies that existed in statistics on income’, he said on Dutch online news site De Limburger. ‘There were two significant gaps in the figures, in 2001 and 2011. […] We solved that omission so we can now see trends in income from 1977 to the present.’

‘The machine works’

He continues: ‘Now that the statistics have been repaired and we can compare the years before and after 2001, we see no increase in inequality of disposable income. That is income after taxes, allowances and benefits. We do observe that primary income has become more unevenly distributed over the years. The redistribution machine has had to work harder. But the machine is working, so that income ratios below the line remained the same.

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