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MEASURING THE LIFETIME REDISTRIBUTION ACHIEVED BY DUTCH TAXATION, CASH TRANSFER AND NON‐CASH BENEFITS PROGRAMS
Author(s) -
Ter Rele Harry
Publication year - 2007
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2007.00233.x
Subject(s) - redistribution (election) , economics , welfare , cash , cash transfers , inequality , educational attainment , public economics , population , demographic economics , labour economics , econometrics , macroeconomics , economic growth , mathematics , mathematical analysis , demography , sociology , politics , political science , law , market economy
This paper assesses how the Dutch system of taxation, cash transfers and non‐cash benefits redistributes between the rich and the poor. The approach in this paper deviates from the usual approach by incorporating the full life cycle in the measurements, rather than only the annual effects. Moreover, the coverage is larger than is usually the case: the paper takes account of both direct and indirect taxes and direct and indirect benefits. In order to obtain the measurements on redistribution, we use the level of educational attainment to classify the population. We therefore measure, in terms of present values, the average net benefit from government policies for an average representative person of each level of education. The results indicate a sizable redistribution from the rich to the poor and a significant reduction of welfare inequality. The net effect on welfare inequality is, however, substantially smaller than when measured on an annual basis.