Household disposable incomes have grown strongly in Ireland over the past 30 years, through periods of boom and bust. Income inequality has been broadly stable in Ireland, against a trend towards increased inequality internationally. As a result low, middle and high-income households in Ireland have all seen substantial growth in their incomes – unlike the slow and unequal growth seen in the UK and the US. Ireland, once towards the high end of the inequality spectrum for an advanced country, is now close to the OECD average for income inequality.
Professor Tim Callan noted that “The welfare and tax systems have played a key role in shaping these outcomes. Welfare payment rates have risen at least in line with wage growth over the 1987 to 2014 period, ensuring that growth in low incomes keeps pace with broader income growth.” Changes to tax and welfare over and above wage indexation have led to gains which were greatest for those with the lowest incomes. Much of this impact 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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The ESRI produces research that contributes to understanding economic and social change in the new international context and that informs public policymaking and civil society in Ireland.