Non-bunching at kinks and notches in cash transfers in the Netherlands

Abstract

We study the behavioural responses to kinks and notches in the Dutch system of cash transfers, using data on the universe of Dutch households for the period 2007–2014. We typically do not find statistically significant evidence of bunching around kinks or notches, neither in income nor in wealth. This finding is robust across different household types and modes of employment. We consider potential mechanisms that can explain this apparent lack of bunching.