In Figure 33 we regard the dynamic GNRM ’s, now plotted for various values of r. We can see that the rise is largest in the lower reaches of the graph. For example the 50% rate already reaches the level 1.6 around the index value of 4, and 1.6 does not differ much from the limit value of 2.
Figure 33: Gross-to-net ratio, in dynamics,
for various marginal tax rates
31. Differential impact of the minimum wage on exposed and sheltered sectors
Some sectors of the economy are exposed to foreign competition and some are sheltered from it. These exposed and sheltered sectors are likely to have a different composition of their labour force, notably different rates of dependency on the minimum wage. If a national incomes policy does not respect these differences, a country can have both unemployment and a surplus on the trade account.
Introduction
The two Oil Crises in the 1970s created a problem for the Dutch economy which has become known in the literature as the so-called “Dutch Disease”. When the price of a nationally produced but internationally traded resource rises - and this happened since Holland is rich in natural gas and a free rider of OPEC - then this causes the exchange rate to rise, and then this indirectly causes a reduction of the other exports and an increase in competing imports. Thus the original increase in national wealth paradoxically combines with an increase in unemployment - and eventually a lower growth path.
This chapter concerns the Dutch policy reaction to that Dutch Disease. If policy is not targetted at stabilisation of the exchange rate by monetary means and capital flows, but at tinkering with the labour market, then the situation - the disease - can grow worse.