Women's disposable income more affected by long-term budgetary policy

Changes to the tax and benefit system between 2008 and 2018 led to greater income reductions for women than for men, according to recent ESRI research funded by the Parliamentary Budget Office. Gender differences in the impact of budgetary policy were most pronounced during the period of austerity budgets (2008-2012) while more gender neutral policy reforms occurred during the period of 2013-2018.

Gender differences in the impact of Irish budgetary policy over the last decade can be traced back to the fact that women are more likely than men to be lone parents, to be out of the labour force and to benefit from child-related supports. For example, the last decade of budgetary policy has affected single men and women without children in a similar manner. Equally, there is little evidence of a gender difference in the impact of budgetary policy for men and women who engage in paid work.

However, lone parents (who are mainly women) lost proportionally more due to budgetary policy over the last decade than singles without children. Within couples, the last decade of budgetary policy resulted in reductions to women’s disposable income compared to that of their spouse, particularly in households with children. However, the significance of this difference is lessened by the fact that spouses tend to share resources.

Most of the gender difference in the impact of budgetary policy can be attributed to reductions in Child Benefit and other welfare payments during the austerity period and to the fact that welfare payments failed to keep pace with inflation during the recovery period. As a result, much of the differential impact of tax and benefit changes is concentrated in the lower half of the income distribution. That is, in instances where women lost out by more than men, the difference was most noticeable when comparing women and men from low-income households.

“Although tax and welfare policies do not typically differentiate based on gender, they can affect men and women differently. Men tend to have higher earnings than women, resulting in different income tax liabilities and benefit entitlement. The gender budgeting tool developed in this project will allow an assessment of the gender impact of any future budgetary changes, an important step in promoting gender equality in Ireland”, according to Dr. Karina Doorley, an author of the report.

Annette Connolly, Director of the Parliamentary Budget Office noted that “the findings from this paper, which was commissioned by the PBO, highlight how fiscal policy has the potential to impact on men and women differently, particularly when also considering differences in socio-economic circumstance. As the Government has committed to the expansion of the initial 2017 Equality Budgeting pilot to other areas of inequality, this incorporation of gender into the SWITCH model will enable gender-proofing to be carried out in respect of budgetary policy in Budget 2020, and beyond.”