BUDGET PERSPECTIVES 2019, PAPER 3. INCOME GROWTH AND INCOME DISTRIBUTION: A LONG-RUN VIEW OF IRISH EXPERIENCE. July 2018

Callan, Tim and Bercholz, Maxime and Walsh, John R. (2018) BUDGET PERSPECTIVES 2019, PAPER 3. INCOME GROWTH AND INCOME DISTRIBUTION: A LONG-RUN VIEW OF IRISH EXPERIENCE. July 2018. [Policy Paper]

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Abstract

Over the past 30 years, there have been periods of boom and bust, but average household incomes have grown strongly in Ireland. The distribution of household income has been broadly stable over this period, so that there has been substantial growth for low-, middle- and high-income households. Ireland’s rapid, even growth in incomes across the distribution is unusual in an international setting. During this time, inequality has risen in many other countries. As a result, while Ireland was once towards the high end of the inequality spectrum for an advanced country, it now occupies a middle-ranking position. Market income inequality is high in Ireland, but a redistributive tax and transfer system has helped to offset that. Over the 1987 to 2014 period, discretionary changes in tax and welfare policy led to gains which were greatest among those with incomes in the lowest 20 per cent of households. Much of this differential growth in incomes arose from the implementation of the recommendations of the Commission on Social Welfare (1986), which raised the payment rates for the schemes with the lowest payment levels.

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