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The Changing Nature of Irish Wage Inequality from Boom to Bust

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  • Niamh Holton

    (Nevin Economic Research Institute)

  • Donal O'Neill

    (Economics,Finance and Accounting National University of Ireland)

Abstract

The dramatic change in economic conditions in Ireland over the last 10 years provides an opportunity to examine the impact of large macroeconomic shocks on inequality. We analyse wage inequality in Ireland, from the height of an economic boom, through a very deep recession, to the start of a recovery. In keeping with previous work we find that the dispersion in wages increased towards the height of the boom, driven largely by rising returns to skill. However the economic crisis of 2008-2013 was accompanied by a significant reduction in wage dispersion. Although the improving characteristics of the workforce increased wages for all workers over this period, this was offset by falling returns to these skills. Only workers in the lowest decile were unaffected by declining returns, resulting in a reduction in wage inequality during the recession. Our analysis highlights the important role played by the national minimum wage in this process.

Suggested Citation

  • Niamh Holton & Donal O'Neill, 2015. "The Changing Nature of Irish Wage Inequality from Boom to Bust," Economics Department Working Paper Series n264-15.pdf, Department of Economics, National University of Ireland - Maynooth.
    • Handle: RePEc:may:mayecw:n264-15.pdf
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    Cited by:

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    2. Paul Redmond & Seamus McGuinness, 2019. "Assessing the Impact of the Minimum Wage in Ireland," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(04), pages 23-26, January.
    3. Logue, Caitriona & Colgan, Brian & Callan, Tim, 2016. "Low Pay, Minimum Wages and Household Incomes: Evidence for Ireland," Papers BP2017/3, Economic and Social Research Institute (ESRI).
    4. Roantree, Barra & Barrett, Michelle & Redmond, Paul, 2022. "Poverty, income inequality and living standards in Ireland: 2nd annual report," Research Series, Economic and Social Research Institute (ESRI), number JR1, June.
    5. Paul Redmond & Karina Doorley & Seamus McGuinness, 2021. "The impact of a minimum wage change on the distribution of wages and household income," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1034-1056.
    6. Redmond, Paul & McGuinness, Seamus, 2021. "The impact of the 2016 minimum wage increase on average labour costs, hours worked and employment in Irish firms," Research Series, Economic and Social Research Institute (ESRI), number RS118, June.
    7. Redmond, Paul & Doorley, Karina & McGuinness, Seamus, 2019. "The impact of a change in the National Minimum Wage on the distribution of hourly wages and household income in Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS86, June.
    8. Nóirín McCarthy & Peter W. Wright, 2018. "The Impact of Displacement on the Earnings of Workers in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(4), pages 373-417.
    9. 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.
    10. Redmond, Paul, 2020. "Minimum wage policy in Ireland," Papers BP2021/2, Economic and Social Research Institute (ESRI).
    11. Roantree, Barra & Doorley, Karina, 2023. "Poverty, income inequality and living standards in Ireland: Third annual report," Research Series, Economic and Social Research Institute (ESRI), number JR4, June.

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    More about this item

    Keywords

    Inequality; Great Recession; composition Bias;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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