The Netherlands: Policy-enhanced inequalities tempered by household formation

Dutch inequality in market incomes has grown significantly and structurally, especially at the top. Income redistribution remained important but did not fully compensate, and policy actually enhanced inequality in net equivalized incomes. Lower minimum wages and benefits induced a sharp rise in the 1980s, and the ensuing restructuring of social security led to a slow further increase. Relative poverty trends follow the same pattern. The consequences for low incomes were exacerbated by a tax reform in 1990, but a more fundamental tax reform in 2001 neutralized part of this. Shifts in household composition offer considerable compensation for the rise in inequality. However, strong gradients by educational attainment have proliferated across many of the fields where we examined the social and political/cultural impacts of growing inequality. Only occasionally, and often hampered by a lack of long-run data, impacts are found that seem linked to inequality growth over time.