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Crisis, Response and Distributional Impact: The Case of Ireland

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  • Callan, Tim
  • Nolan, Brian
  • Keane, Claire
  • Savage, Michael
  • Walsh, John R.

Abstract

Ireland is one of the countries most severely affected by the Great Recession. National income fell by more than 10 per cent between 2007 and 2012, as a result of the bursting of a remarkable property bubble, an exceptionally severe banking crisis, and deep fiscal adjustment. This paper examines the income distribution consequences of the recession, and identifies the impact of a broad range of austerity policies on the income distribution. The overall fall in income was just under 8 per cent between 2008 and 2011, but the greatest losses were strongly concentrated on the bottom and top deciles. Tax, welfare and public sector pay changes over the 2008 to 2012 period gave rise to lower than average losses for the bottom decile. Thus, the larger than average losses observed overall are not due to these policy changes; instead, the main driving factors are the direct effects of the recession itself. Policy changes do contribute to the larger than average losses at high income levels.

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Bibliographic Info

Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP456.

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Date of creation: Jun 2013
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Handle: RePEc:esr:wpaper:wp456

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Keywords: income distribution/Ireland/Policy/recession/taxes;

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References

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  1. Bargain, Olivier & Callan, Tim & Doorley, Karina & Keane, Claire, 2013. "Changes in Income Distributions and the Role of Tax-Benefit Policy During the Great Recession: An International Perspective," IZA Discussion Papers 7737, Institute for the Study of Labor (IZA).
  2. Callan, Tim & Keane, Claire & Savage, Michael & Walsh, John R., 2013. "Distributional Impact of Tax, Welfare and Public Service Pay Policies: Budget 2014 and Budgets 2009-2014," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
  3. repec:ese:emodwp:em21-13 is not listed on IDEAS
  4. Olivier Bargain & Tim Callan, 2007. "Analysing the Effects of Tax-benefit Reforms on Income Distribution - A Decomposition Approach," Working Papers 200713, School Of Economics, University College Dublin.
  5. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-85, November.
  6. Paul, Satya, 2004. "Income sources effects on inequality," Journal of Development Economics, Elsevier, vol. 73(1), pages 435-451, February.
  7. repec:ese:emodwp:em5-07 is not listed on IDEAS
  8. Callan, Tim & Keane, Claire & Savage, Michael & Walsh, John R. & Timoney, Kevin, 2012. "Work Incentives: New Evidence for Ireland," Papers BP2013/3, Economic and Social Research Institute (ESRI).
  9. Jeff Larrimore & Richard V. Burkhauser & Philip Armour, 2013. "Accounting for Income Changes over the Great Recession (2007-2010) Relative to Previous Recessions: The Importance of Taxes and Transfers," NBER Working Papers 19699, National Bureau of Economic Research, Inc.
  10. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  11. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
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Cited by:
  1. David Madden, 2013. "Health and Wealth on the Roller-Coaster: Ireland, 2003-2011," Working Papers 201305, School Of Economics, University College Dublin.
  2. Gerlach, Petra & Merola, Rossana, 2013. "Consumption and Credit Constraints: A Model and Evidence for Ireland," Papers WP471, Economic and Social Research Institute (ESRI).
  3. Gerlach, Petra, 2013. "The Effect of Unemployment, Arrears and Negative Equity on Consumption: Ireland in 2009/10," Papers WP457, Economic and Social Research Institute (ESRI).
  4. Gerlach, Petra, 2013. "Younger and Older Households in the Crisis," Research Notes RN2013/1/4, Economic and Social Research Institute (ESRI).
  5. Marcell Zoltán Végh, 2014. "Has Austerity Succeeded in Ameliorating the Economic Climate? The Cases of Ireland, Cyprus and Greece," Social Sciences, MDPI, Open Access Journal, vol. 3(2), pages 288-307, June.
  6. FitzGerald, John & Kearney, Ide & Bergin, Adele & Conefrey, Thomas & Duffy, David & Timoney, Kevin & Znuderl, Nusa, 2013. "Medium-Term Review: 2013-2020, No. 12," Forecasting Report, Economic and Social Research Institute (ESRI), number MTR12.
  7. repec:esr:wpaper:rn2013/1/4 is not listed on IDEAS
  8. David Madden, 2013. "Winners and Losers on the Roller-Coaster: Ireland, 2003-2011," Working Papers 201315, School Of Economics, University College Dublin.

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