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Why is Relative Income Poverty so High in Ireland?

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Author Info

  • Callan, Tim

    (Economic and Social Research Institute (ESRI))

  • Keeney, Mary J.

    (Economic and Social Research Institute (ESRI))

  • Nolan, Brian

    (Economic and Social Research Institute (ESRI))

  • Maitre, Bertrand

    (Economic and Social Research Institute (ESRI))

Abstract

Although relative income poverty rates vary from year to year, the rankings of different industrialised countries according to these poverty measures tend to be rather stable. Ireland is consistently among a group of countries with relative income poverty rates considerably above the European Union average (though not as high as the USA). This has not changed over the course of Irelands recent economic boom, since our relative income poverty rates themselves have not fallen indeed they have generally risen over that period. This study asks why Ireland has higher relative income poverty rates than many of our EU partners? More specifically, it explores what we can learn from an in-depth comparison with a number of other European countries, including some of the best performers in the European Union in terms of that indicator. This approach has parallels with a number of developments in the social and employment policy agenda at EU level. Atkinson (2000) notes that the Belgian government proposed that all member states should seek to match the performance of the three best states in combating poverty. This links closely with the open method of co-ordination agreed at Lisbon, a process in which clear and mutually agreed objectives are defined, after which peer review, on the basis of national action plans, enables EU Member States to compare practices and learn from each other. This method respects and is in fact built upon local diversity. (Vandenbroucke, 2002). Similarly, the UKs new targets for child poverty include a criterion that the UK rate should be among the best in Europe. We begin (Chapter 2) by discussing the nature of relative income poverty rates as poverty measures, their limitations and uses and their growing importance in an EU context. Chapter 3 then looks at how relative income poverty rates actually vary across EU member states, using the latest harmonised data. Chapter 4 reviews some of the main findings of previous investigations into cross-country differences in relative income poverty rates, and undertakes a new investigation of the role of wage inequality in explaining differences in relative income poverty. Our research then employs a variety of analytic approaches to see what is distinctive about Ireland. The implications for relative income poverty rates of differences in age structure, household structure, and labour market conditions are explored in Chapter 5, focusing on five countries. This is done by simulating what the relative income poverty rate would be if each of these countries shared a common age structure, household structure or pattern of unemployment and labour market participation. This exercise and other studies carried out elsewhere point towards the importance of social protection as a key influence. In Chapter 6 we therefore look in detail at social protection spending in Ireland compared with other EU countries. What would be the impact on relative poverty if the level and/or structure of social protection spending in Ireland were to become similar to that of countries with low poverty rates, such as Denmark and the Netherlands? We explore this question using SWITCH, the Irish tax-benefit model. The main findings are drawn together in Chapter 7.

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Bibliographic Info

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This book is provided by Economic and Social Research Institute (ESRI) in its series Research Series with number PRS53 and published in 2004.

ISBN: 0707002281
Handle: RePEc:esr:resser:prs53

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References

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  1. Nolan, Brian & Whelan, Christopher T., 1996. "Resources, Deprivation, and Poverty," OUP Catalogue, Oxford University Press, number 9780198287858.
  2. repec:ese:iserwp:2002-14 is not listed on IDEAS
  3. Caminada, Koen & Goudswaard, Kees, 2001. "International trends in income inequality and social policy," MPRA Paper 20181, University Library of Munich, Germany.
  4. Whelan, Christopher T. & Layte, Richard & Maitre, Bertrand & Gannon, Brenda & Nolan, Brian & Watson, Dorothy & Williams, James, 2003. "Monitoring Poverty trends in Ireland: Results from the 2001 Living in Ireland Survey," Research Series, Economic and Social Research Institute (ESRI), number PRS51.
  5. Feres, Patricio & Immervoll, Herwig & Lietz, Christine & Levy, Horacio & Mantovani, Daniela & Sutherland, Holly, 2002. "Indicators for social inclusion in the European Union: how responsive are they to macro-level changes?," EUROMOD Working Papers EM3/02, EUROMOD at the Institute for Social and Economic Research.
  6. Russell, Helen & Layte, Richard & Maitre, Bertrand & O'Connell, Philip J. & Whelan, Christopher T., 2004. "Work-Poor Households: The Welfare Implications of Changing Household Employment Patterns," Research Series, Economic and Social Research Institute (ESRI), number PRS52.
  7. Daron Acemoglu, 2002. "Cross-Country Inequality Trends," NBER Working Papers 8832, National Bureau of Economic Research, Inc.
  8. Atkinson, A.B., 2000. "A European social agenda: poverty benchmarking and social transfers," EUROMOD Working Papers EM3/00, EUROMOD at the Institute for Social and Economic Research.
  9. Nolan, Brian & Gannon, Brenda & Layte, Richard & Watson, Dorothy & Whelan, Christopher T. & Williams, James, 2002. "Monitoring Poverty Trends in Ireland: Results from the 2000 Living in Ireland survey," Research Series, Economic and Social Research Institute (ESRI), number PRS45.
  10. Sutherland, Holly & Immervoll, Herwig & O'Donoghue, Cathal, 1999. "An introduction to EUROMOD," EUROMOD Working Papers EM0/99, EUROMOD at the Institute for Social and Economic Research.
  11. Bourguignon, Francois & Ferreira, Francisco H. G., 2002. "Beyond Oaxaca-Blinder : accounting for differences in household income distributions across countries," Policy Research Working Paper Series 2828, The World Bank.
  12. Thomas Piketty & Emmanuel Saez, 2003. "Income Inequality In The United States, 1913-1998," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 1-39, February.
  13. Aaberge, Rolf & Björklund, Anders & Jäntti, Markus & Palme, Mårten & Pedersen, Peder & Smith, Nina & Wennemo, Tom, 1996. "Income Inequality and Income Mobility in the Scandinavian Countries Compared to the United States," Working Paper Series in Economics and Finance 98, Stockholm School of Economics, revised Aug 2002.
  14. Heady, Christopher & Mitrakos, Theodore & Tsakloglou, Panos, 2001. "The Distributional Impact of Social Transfers in the European Union: Evidence from the ECHP," IZA Discussion Papers 356, Institute for the Study of Labor (IZA).
  15. Michael Förster & Mark Pearson, 2002. "Income Distribution and Poverty in the OECD Area: Trends and Driving Forces," OECD Economic Studies, OECD Publishing, vol. 2002(1), pages 7-38.
  16. Martin Biewen & Stephen P. Jenkins, 2002. "Accounting for Poverty Differences between the United States, Great Britain, and Germany," Discussion Papers of DIW Berlin 311, DIW Berlin, German Institute for Economic Research.
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Citations

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Cited by:
  1. Wasiu Adekunle Are, 2012. "Growth and Income Redistribution Components of Changes in Poverty: A Decomposition Analysis for Ireland, 1987-2005," Working Papers 201231, School Of Economics, University College Dublin.
  2. Halpin, Brendan & Hill, John, 2007. "Active Labour Market Programmes and Poverty Dynamics in Ireland: 1994-2001," MPRA Paper 10340, University Library of Munich, Germany.
  3. Halpin, Brendan & Hill, John, 2008. "Active Labour Market Programmes and Poverty Dynamics in Ireland," MPRA Paper 10335, University Library of Munich, Germany.
  4. Anthony Barnes Atkinson, 2005. "EUROMOD and the Development of EU Social Policy," Discussion Papers of DIW Berlin 467, DIW Berlin, German Institute for Economic Research.
  5. Maitre, Bertrand & Nolan, Brian & Whelan, Christopher T., 2006. "Reconfiguring the Measurement of Deprivation and Consistent Poverty in Ireland," Research Series, Economic and Social Research Institute (ESRI), number PRS58.
  6. Hill, John & Halpin, Brendan, 2008. "The Role of Active Labour Market Programmes in Employment Policy," MPRA Paper 10498, University Library of Munich, Germany.
  7. Wasiu Adekunle Are, 2012. "Poverty-Reducing Directions of Indirect Marginal Tax Reforms in Ireland," Working Papers 201230, School Of Economics, University College Dublin.

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