Category: Inequality

ESRI QEC Research Notes

Last week the latest ESRI Quarterly Economic Commentary was published. It includes 5 research notes including one by myself on the regional dimension of the unemployment crisis.

While there is a lot of discussion about unemployment, the differences across regions have not received much attention. The note shows that the differences are significant. It also shows that things would look a lot worse if it had not been for a drop in labour force participation – in the Border region the unemployment rate could have reached 27%. Not surprisingly a sharp drop in employment is the major cause of the increase in unemployment, but a look at the sectoral breakdown of employment changes gives some interesting results. Firstly, construction employment appears to have contracted quite uniformly across the country. Secondly, employment in education and health actually grew. Thirdly, there are some interesting differences across the regions with respect to other sectors. For example, manufacturing declined much more in Dublin than elsewhere. Most importantly the analysis suggests that the underlying factors that are responsible for the differences in unemployment rates across the regions are very persistent but were hidden during the boom. You can expect some more analysis on this in the near future.

The other notes are:
Tax and Taxable Capacity: Ireland in Comparative Perspective
Comparing Public and Private Sector Pay in Ireland: Size Matters
Trends in Consumption since the Crisis
Revisions to Population, Migration and the Labour Force, 2007-2011

Work and Poverty in Ireland

A new report commissioned by the Department of Social Protection and undertaken by the ESRI is available here. 

The focus of the report is on the very low work intensity (VLWI) measure of social exclusion with which Ireland is a significant outlier.  In Ireland 22.8% of people under 60 live in households with very low work intensity compared to an EU27 average of 10%.  The report looks at the trend in this measure over time and the characteristics of households that comprise this group. 

Property Tax: ESRI Conference Paper

 

A conference paper  provides evidence relevant to some key choices in the design of a new property tax.  While the paper does not recommend a specific blueprint, it draws on evidence from other countries as to “what works” and analyses the impact of different forms of property tax on a nationally representative sample of households.

Ronan Lyons post yesterday contained three main comments on the paper.  Because some of these appear to have drawn primarily on an Irish Independent report that contained inaccuracies, rather than on the paper itself, it seemed best to issue this as a new post.

1.        The first comment is that “there should be no exemptions from a property tax, only deferrals”.  The  SWITCH model is set up to analyse policy choices.  As I see it, the level of an income exemption limit is a choice variable, and in this context, zero would be Ronan’s preferred option.  Our research found a range of positive values in evidence in many countries. For example, the UK Council Tax Benefit effectively exempts those with incomes close to minimum social security levels. In Northern Ireland, they have set a higher income limit than in the rest of the UK. In our analysis we report income distribution impacts for the zero case, and also for levels at the State Contributory Pension and State Pension+25%. Our work points out the implications of the different choices. Making such a choice is a matter for public debate and government decision. Our paper aims to inform that choice.

2.       The second comment is that “a property tax should most certainly not be related back to income”.  I’m not sure what he has in mind here but it is important not to misunderstand our analysis. Apart from income exemption limits and some marginal relief above this (necessary to prevent 100%+ tax  rates), the property tax bill we consider is simply a flat percentage of market value. We analyse what the outcome is in terms of how the burden is spread across the income distribution – this depends on how, in practice, property values and incomes are related, as well as on the effects of exemption limit provisions. These are questions of legitimate interest for research and policy.

3.       Thirdly, it is stated that our paper asserts that Ireland has “no database on site values”: This is not what we said – it reflects an inaccuracy in the Irish Independent’s report. What we said is that “to our knowledge, there is no data source which combines information on site characteristics (location and size) and household incomes, so that it is not possible to provide a clear picture of how a Site Value Tax relates to ability to pay or its impact on the distribution of income”. If there is such a source, we would be glad to hear of it.

 

2010 Survey of Income and Living Conditions

The CSO have now released the full results of the 2010 EU-SILC.  The report gives lots of detail on income and poverty in Ireland.  One graph immediately stood out.

Care has to be taken when interpreting this as different households are surveyed each year and the composition of the households in each decile will also change.  Detailed tables can be seen in the report which can be compared to those in the 2009 release.

When looking at the annual change by household composition the following can be seen.

The largest drops are seen for households with one adult aged under 65 and no children under 18, and “other households with children”.  Drops are also recorded for other categories.

Household Budget Survey

The CSO have released the first results of the most recent HBS which was taken between August 2009 and September 2010.  There is also this press release.

Average weekly expenditure is estimated to be €810 per week or around €42,000 per year.  The release contains lots of detailed information by income decile, region, location and household tenure.