Rotterdam is an extreme example of inequality in the Netherlands. For example, there are enormous differences in life expectancy and health between neighborhoods. Good access to healthcare and education doesn't solve everything, according to inequality economists Lieke Beekers and Hans van Kippersluis. By Rianne Lindhout
From flashy high-tech companies to household poverty. What does the South Holland economy look like for the people themselves?
Hans van Kippersluis: "In terms of inequality, Rotterdam, along with The Hague, is the most extreme example in the Netherlands, with, for example, enormous differences in health by neighborhood and socioeconomic background – I'm always shocked when I see the numbers. The RIVM Neighborhood Atlas shows that in the new Zestienhoven neighborhood, 80 percent of adults experience good health. In the Afrikaanderwijk neighborhood, only 50 percent." The difference in healthy life expectancy between the 20 percent least prosperous and the 20 percent most prosperous Dutch population is as much as 23 years. Furthermore, in South Holland, there are significant differences in prosperity between the major cities and surrounding municipalities.
Lieke Beekers: "The online Opportunity Map, for example, shows that the average annual income in the municipality of Lansingerland is around €50,000, and in Rotterdam it's around €39,000. My students, who conduct research in poorer neighborhoods in The Hague for projects of the Entry-Level Economy, say that the circumstances they encounter there often have a profound impact on them."
A higher and more stable income promotes children's health.'
We are increasingly seeing that Gross Domestic Product is insufficient to measure whether the economy is performing well. So how do you measure it?
Van Kippersluis: "CBS considers broad prosperity as the quality of life and also examines the extent to which our broad prosperity here and now comes at the expense of that in the future or elsewhere in the world. It uses 41 indicators to measure that prosperity, from disposable income and life expectancy to satisfaction with leisure time and the amount of particulate matter in the air.
"What I'm still missing is the extent to which people experience poverty. Officially, poverty has decreased over the past thirty years. Fewer people live below the subsistence level, but if the rest of us are making more progress and can, for example, afford that expensive phone for their child, many people above the official minimum also feel poor." Beekers: "Perceived inequality can be a valuable indicator of well-being, because it provides insight into how people perceive their own position and that of others in society."
What is the most pressing distributional issue?
Beekers: "The health gap. Johannes Spinnewijn, using CBS data, determined that there's an eight- to twelve-year difference in life expectancy between Dutch men with the lowest and highest incomes. People with the lowest incomes start developing chronic diseases as early as thirty, so that's where you see that gap already emerging."
Van Kippersluis: "The health disparities are not only extreme, they're also enormously important from an economic perspective." Firstly, because health is a necessary condition for productivity and happiness. And secondly, because you can't redistribute health the way you can with income disparities, through tax measures like healthcare or housing benefits.
Health disparities are apparently linked to poverty. What can South Holland do about it?
Beekers: "Socioeconomic differences and geographical factors—such as which municipality you live in and the amount of particulate matter in the air—appear to be more important than biological factors like heredity and unhealthy behavior. In a country like the Netherlands, where health insurance is accessible to everyone, the possibilities for achieving significant improvements in this area are limited."
Van Kippersluis: "If you reduce socioeconomic disparities, health disparities also reduce. However, I don't believe they stem exclusively from a poverty problem. For example, giving people a basic income or having them win a substantial amount of money every month in the lottery has little effect on health. However, there are indications that a higher and more stable income improves children's health outcomes. So it's a long-term story. Low-hanging fruit, such as making smoking more expensive and promoting healthy eating, certainly has an effect. The same goes for renovating moldy rental properties." The latter requires a lot of money and political will, but it's also worth it because of all the illnesses it prevents.
Renovating moldy rental properties requires a lot of money and political will, but it pays off'
Should we also rely on greener residential areas without particulate matter?
Beekers: "In the American study Moving To Opportunity, people from social housing in poor neighborhoods received a voucher to move to a better neighborhood. This did result in improved health, but in America, you also go to a better school in a better neighborhood, and other differences are also greater. This makes it difficult to translate these results to the Netherlands."
Van Kippersluis: "For about ten years, we've been increasingly looking at the correlation between environmental and genetic factors. This is possible with datasets that contain both socioeconomic and biological information. After all, every outcome is a mix of nature and nurture. We're now looking at English data to see how much of the relationship between parents and children's educational attainment stems from genetic and environmental factors. It appears that the genetic influence amounts to around 25 to 35 percent." For height and IQ, for example, this is probably somewhat higher, but for someone's financial wealth, for example, it's much lower. This aligns with findings from twin and adoption studies. This type of research is still in its infancy within economics. Also promising is research into the role of chronic stress, by measuring stress hormones in hair.
You inherit both your genes and your upbringing from your parents. What can school do for equal opportunities?
Van Kippersluis: "There is some evidence that sending children to school at a young age can reduce differences between children, and that children from socioeconomically disadvantaged families, in particular, benefit more from childcare and preschool. We also know that test scores correlate more strongly with parental background at a younger age than later in life. So, later selection could be beneficial for children with socioeconomic disadvantage."
Beekers: "That's not a clear-cut advantage, because research also shows that being taught at your own level can be a major advantage. I think certain people's preferences also play a role: what do they want, what are their ambitions?" You can't expect everyone to strive for a high education or a high income.
Should something also be done about wealth inequality to promote equal opportunities?
Beekers: "Statistics Netherlands (CBS) data shows that the richest 10 percent of households owned approximately 54 percent of the total wealth in 2022, not including pension assets. Socialist Party leader Jimmy Dijk argued for a significant increase in inheritance tax for larger inheritances. Such an intervention would generate enormous debate."
Van Kippersluis: "Increasing that tax is good for wealth inequality, but it does indeed generate enormous resistance. What I find interesting is that all political parties are in favor of equal opportunities, but what they intend to do about it is unclear. That's also difficult to determine as long as it's unclear what exactly inequality of opportunity is and what it stems from."
Beekers: "According to philosopher John Rawls, equality of opportunity means that people with the same talents and motivation should also have equal opportunities for success, regardless of their socioeconomic background or birth position." Van Kippersluis: "I sometimes get the feeling that the concept of equality of opportunity is a kind of new buzzword that everyone supports. But it's a false consensus that distracts from important questions like: how much income and wealth inequality do we consider justified in the Netherlands?"
My students who conduct research in poorer neighborhoods in The Hague are deeply impressed.'
What about differences between generations? Is the next generation better off than the previous one?
Van Kippersluis: "For people born between 1960 and 1980, the Netherlands led the world in intergenerational income growth, adjusted for inflation. Before those birth years, about 80 percent of children earned more than their parents. This increased family income was primarily driven by the rising labor force participation of women. But since then, this percentage has stagnated and is now steadily declining. The message of capitalism is that each generation should be better off. That is now eroding. Not only in terms of upward mobility, but also in terms of healthy lifespans, political stability, and climate and environmental issues. It is no longer self-evident that each generation is better off than the previous one. This is causing social unrest.
Dr. Lieke Beekers is a university lecturer in the Department of Economics at Leiden University. She studies socioeconomic inequality, the economics of education, health economics, and applied micro-econometrics. She evaluates economic policy using administrative data and surveys.
Prof. Dr. Hans van Kippersluis is a professor of applied economics at Erasmus University Rotterdam. He uses econometric tools to investigate inequality in human capital, such as health and education, and how we can stimulate investments in areas such as healthy behavior, education, and labor supply.
This article is from the new Leiden-Delft-Erasmus white paper 'The Economy of South Holland: Earning - Distributing - Changing'.