Indexation on Net[W] means that the left hand side is 1, and that Net[W] / B is some constant. Setting net income ratio B / Net[W] = NIR[0]:
NIR[0] = (RIR - (1 - RIR)
g / W / n) / (1 - RIR u)
We want to find the conditions under which RIR is a constant (for the ‘real welfare state’). Solving above expression for RIR gives:
A special case has