MEASURING THE LIFETIME REDISTRIBUTION ACHIEVED BY DUTCH TAXATION, CASH TRANSFER AND NON-CASH BENEFITS PROGRAMS

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.     

Optimizing the Life-Cycle Path of Pension Premium Payments and the Pension Ambition in the Netherlands

De Economist - We determine the optimal life-cycle path of pension premiums during the working ages and pension benefits during retirement, assuming that households can choose these freely. We...     

Ageing and the Conflict of Interest Between Generations

The ageing of the population imposes a considerable burden on long-term public finances in most industrialized countries. Generational accounting has been used across the world to assess the generational imbalance associated with current public policies. In this study, we incorporate Dutch generational accounts in an open economy overlapping generations model to assess the sustainability gap in current Dutch public finances. Our central estimate of the gap is 4.5% of gdp, but the paper also shows the sensitivity of this result. We explore a variety of policy reforms to reduce the sustainability gap, thereby presenting the impact on the intergenerational distribution of the net benefit from government.     

Generational Accounts for the Dutch Public Sector*

After 2010 the aging of the population will start to form a sizable burden on public finances. On the other hand, some shifts in the private sector, such as the increase of labour participation, are expected to generate higher tax revenues. These contrasting developments raise the question whether the present system of public arrangements is sustainable in the long run or will, on balance, result in an unfavourable treatment of future generations. This paper, which assigns net public sector benefits to generations, indicates that the present arrangements are unsustainable when indexed to productivity growth. However, the required policy adjustment can be considered small. Because the alleviating factors will occur before the sizeable effects of aging set in, implementing a sustainable system implies a sharp reduction of the budget deficit in the coming decades. The paper uses, and in some ways extends, the standard Generational Accounting methodology as developed by Auerbach, Gokhale, and Kotlikoff.     

Measuring Housing Subsidies: Distortionary and Distributional Effects in the Netherlands

This paper measures the distortionary and distributional effects of housing subsidies in the Netherlands. Its broad scope allows us to discuss the results in the light of the main justifications for subsidising housing, i.e. the merit–good argument, external effects and the distribution motive. Our measurements reveal some patterns of subsidisation that seem difficult to justify on these grounds. This applies especially to the differences between subsidisation of rental and owneroccupied housing and between mortgage– and equity–financed ownership. Moreover, the inelastic supply of housing in the Netherlands entails that subsidisation has only a limited effect on promoting housing quality.     

Lifetime Generational Accounts for the Netherlands*

Conventional generational accounting only includes future benefits and burdens from the government. This paper's contribution is to include past benefits and burdens as well, and in this way to provide a full lifetime account of how much current and future generations benefit from government, in net terms, under various future policy lines. The calculations are carried out for the Netherlands and for the cohorts born since 1946. The more complete picture may be helpful for political decision‐making on equitable intergenerational policies. A second contribution of this paper is that it uses a more comprehensive benefit concept than other such backward‐looking studies by including non‐cash benefits as well. The results point out that there are substantial differences in net lifetime benefits between generations and these are mainly driven by non‐cash benefits such as education and healthcare, on which expenditure increased substantially after 1946.     

Generational Accounts for The Netherlands: An Update

This paper extends the standard generational accounting methodologyby incorporating prospective changes in the economic environment,assigning the benefits of government purchases to generations,distinguishing between public consumption and public investment,and transforming the generational accounts into government budgets.It applies the methodology to the Netherlands. An expected increasein labor-force participation almost offsets the adverse effectof aging on the sustainability of the Dutch public finances.Since the rise in labor-force participation occurs before thebulk of the aging, the government will have to run sizable fiscalsurpluses in the next decades in order to create the budgetaryroom for higher age-related government expenditures in laterdecades.