Why has income inequality fallen in Ireland?

Here’s a piece from RTE’s Brainstorm series that looks to explain some of the factors behind Ireland’s outlier position in this chart.

One reply on “Why has income inequality fallen in Ireland?”

This piece is a useful corrective. Thank you. I particularly liked: “At times, it seems like some contributors are more interested in outrage than outcomes and want to ignore the impact of policies perhaps because of their attitude to the people behind them.”

There is no doubt that this ‘great redistribution’ from the upper income deciles (primarily as a result of a highly progressive taxation system – with part funding from the Leprechaun Economy enclave) to the lowest income deciles – with a particular focus on families and children – has had a hugely beneficial impact. And it should be acknowledged.

However, I have a number of issues with your exposition. I won’t go in to detail as it would be a total waste of time and wouldn’t have any impact. Just a few observations should suffice.

The persistently high percentage of low work intensity households is worrying. Does it suggest that the ‘great redistribution’ is generating a very high replacement rate?

There is an increasing number of households fully engaged in the formal economy, but they lack economic and organisational power and are struggling with precarious terms and conditions of employment, very high living costs and an inadequate provision of public services, particularly in the area of health and housing services. Yet they fall outside the ambit of this ‘great redistribution’. Their discontent is increasing and is being exploited politically.

The ‘great redistribution’ is very costly, inefficient and could be seen as inequitable. It is a very expensive way to buy a semblance of social cohesion. And it is generating increasing resentment among those who feel ‘they have to pay for everything, while a lot of people pay for nothing’ and among those who fall outside its ambit.

Even if it hasn’t increased recently, we still have the highest measure of market outcome inequality in the OECD. Why not tackle this and reduce the requirement for this costly ‘great redistribution’?

Most other OECD members have had periods of social democratic governance (or equivalent) and these governments reduced market outcome and final outcome measures of inequality. We haven’t had – and it shows. We’re long overdue this experience and it might be on its way.

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