The Netherlands is well-known for its innovative and open-minded attitude. As founder of the first global trading organization, co-founder of the European Union and the Organization of Economic Co-operation and Development, the Dutch have always had a leading role in economic innovation and co-operation. In 2007, when economic downfall struck every industrialized country, even the Dutch innovation couldn’t prevent a crisis in their country. Now, when times are changing and economies are stabilizing again, this paper will examine the effect the crisis has had on Dutch income (in)equality and compare its position to other European countries. Firstly, it will briefly explain how the inequalities are measured and what determines them. Secondly,
This graph indicates that the economic inequality generally rose during the crisis. However, we can see that economic inequality has decreased in the Netherlands. According to research done by the OECD (June, 2014), this decrease continued from 2011 onwards. Generally speaking, economic inequality has increased in most European countries, but has decreased in the Netherlands. Therefore, economic inequality is relatively low in the Netherlands in comparison to other countries. Many question still remain unsolved. Does this mean that the Dutch economy is more fair? What did the Dutch do differently in order to stand out so
There are progressive taxes on profits, wages, social security and pensions. The more money an inhabitant makes, regardless of how, the higher percentage of his income he has to pay. This roughly means that not everyone pays the same amount in percentages of his income, resulting in a more equal income distribution among inhabitants. This means that income in the Netherlands is levelled using the progressive tax system. Comparing the Dutch tax system to the country that had greatest change income inequality according to the Gini-coefficient table, Spain, there are severe differences. Although Spain also uses a progressive tax system, after strict regulations set by the European Union, Spain’s taxation rates are not as high as in the Netherlands. Just to give an example, Dutch inhabitants are obliged to hand over 52% of their taxable income if it is higher than approximately €55.000. On the other hand, Spanish inhabitants have to hand over 52% of their taxable income if their wage is €300.000 or more. In conclusion, the Dutch system leads to more equality, even though both countries use a progressive taxation system.
Another important factor in the lower economic inequality in the Netherlands is their unique social security system. According to Cassidy (2013), the figure below indicates the Gini-coefficient in the middle of the 2000s, tells that the Gini-coefficient would have