REAL INCOME CHANGES O F HOUSEHOLDS IN THE NETHERLANDS, 1977–1983

Abstract

This paper deals with the construction of statistics on real income changes of households in the Netherlands. Two different figures are computed, called the dynamic and the static figure. The dynamic figure reflects the change in real income as experienced by individuals. It is based on longitudinal data: two panels resulting from an exact match between three files from the Netherlands' IRS. The static figure reflects the change in real income of positions (e.g. of a 60‐year old civil servant) instead of individuals. It is based on micro‐simulation: changes in wages, taxes, etc. are simulated on a sample of individuals for whom socio‐economic and demographic positions are assumed constant.In the paper we discuss both figures and some other problems, e.g. the concept of real income and the price index. Furthermore we give results for the years 1977–1983 and discuss some differences between the dynamic and the static figure. The most notable result is the large variation in the dynamic figure, exhibiting a very substantial income mobility.