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The Welfare Impact of Price Changes on Household Welfare and Inequality 1999-2011

Author

Listed:
  • JASON LOUGHREY

    (Teagasc/National University of Ireland Galway)

  • CATHAL O’DONOGHUE

    (Teagasc)

Abstract

This paper attempts to use applied micro-economic research to understand the impact of price changes over the period 1999-2011 in Ireland. This measure combines an efficiency component using a Linear Expenditure System (LES) and an equity component using the Atkinson Index of Inequality. The efficiency component includes the behavioural response to price changes for non-subsistence expenditures thereby producing a Cost of Living Index. The Atkinson Index of Inequality produces an inequality measure and this is combined with the Cost of Living Index to produce an overall welfare measure. This extends upon the existing Irish literature on this issue by accounting for this broader set of components. The results show that changes in the cost of living have differed substantially between households both in terms of demographics and the position of the household in the income distribution and that behavioural response can potentially improve the welfare position of households in response to price changes in most years.

Suggested Citation

  • Jason Loughrey & Cathal O’Donoghue, 2012. "The Welfare Impact of Price Changes on Household Welfare and Inequality 1999-2011," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 31-66.
    • Handle: RePEc:eso:journl:v:43:y:2012:i:1:p:31-66
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    References listed on IDEAS

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    Cited by:

    1. Sologon, Denisa M. & O'Donoghue, Cathal & Linden, Jules & Kyzyma, Iryna & Loughrey, Jason, 2022. "Welfare and Distributional Impact of Soaring Prices in Europe," IZA Discussion Papers 15738, IZA Network @ LISER.
    2. Zeynep Gizem Can & Cathal O’Donoghue & Denisa M Sologon & Darius Smith & Una Murray, 2025. "Modelling the Distributional Effects of the Cost-of-Living Crisis in Turkey and the South Caucasus: A Microsimulation Analysis," International Journal of Microsimulation, International Microsimulation Association, vol. 18(3), pages 26-49.
    3. Amores, Antonio F. & Christl, Michael & De Agostini, Paola & De Poli, Silvia & Maier, Sofia, 2025. "Limiting Prices or Transferring Money? An ex ante assessment of alternative measures to cope with the hike in energy prices," Energy Economics, Elsevier, vol. 147(C).
    4. Cathal O’Donoghue & Jason Loughrey & Karyn Morrissey, 2013. "Using the EU-SILC to model the impact of the economic crisis on inequality," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-26, December.
    5. Cathal O’Donoghue & Jason Loughrey & Denisa M. Sologon, 2018. "Decomposing the Drivers of Changes in Inequality During the Great Recession in Ireland using the Fields Approach," The Economic and Social Review, Economic and Social Studies, vol. 49(2), pages 173-200.

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