ESRI Research Seminar: Crisis, Response and Distributional Impact: The Case of Ireland

Venue: The ESRI, Whitaker Square, Sir John Rogerson's Quay, Dublin 2

Authors: Tim Callan*, Brian Nolan†, Claire Keane*, Michael Savage*, John R Walsh* (*ESRI; †UCD).

Ireland is one of the countries most severely affected by the economic crisis. National income fell by more than 10 per cent between 2007 and 2012, as a result of the bursting of a property bubble, a banking crisis, and a sharp fiscal adjustment. Ireland’s response to the crisis, as part of an Economic Adjustment Programme overseen by the ‘troika’ is of particular interest: it is sometimes seen as a “test case” for the austerity approach.

This paper focuses on the distributional consequences of the crisis, using the latest available microdata (the CSO’s Survey on Income and Living Conditions 2011, together with revised 2010 data). Key elements include a rise in unemployment from about 4 per cent to 14 per cent; changes in the earnings distribution; sharp rises in taxation; reductions and restrictions on welfare payments; and progressively structured reductions in public sector pay. Our analysis helps to disentangle the impact of these factors, and assess the overall impact of the crisis and the policy response on the distribution of income and on measures of poverty.