Labour market and income inequalities in the Netherlands, 1977–2022

Abstract

We study how changes in labour market outcomes and household composition translate into changes in household incomes in the Netherlands over the period 1977–2022. During this period, the Netherlands witnessed a vast increase in female employment and earnings. This was also the key driver of household income growth. Male employment hardly changed, and male earnings growth was limited, and hence contributed little to household income growth. The increase in employment and earnings was the most pronounced for lower-educated women and women with relatively low earnings. The resulting drop in earnings inequality among women also put a drag on the rise in household income inequality, together with an increase in social benefits and a reduction in taxes for the bottom of the household income distribution. However, overall there was still a small increase in disposable household income inequality because inequality in male earnings increased, with earnings falling in real terms for men with low earnings and rising somewhat for men with high earnings. Furthermore, the proportion of singles increased, in particular among low-earning men and women, and assortative matching on earnings in couples increased. We further show that despite still having relatively low household income inequality overall, a large gap remains between immigrants and natives.