"Relative Income Poverty Risk: What can Ireland Learn from the Best-Performing Countries?"

October 12, 2004

News

12/10/2004

 

"Relative Income Poverty Risk: What can Ireland Learn from the Best-Performing Countries?"

By Tim Callan and Brian Nolan (ESRI)



The paper "Relative Income Poverty Risk: What can Ireland Learn from the Best-Performing Countries?" will be presented at the ESRI/FFS “Budget Perspectives Conference”.



Press Release Embargoed until 00:01 hours, Tuesday 12th October 2004



The European Union agreed in 2001 on a set of indicators to be used in monitoring progress towards the goal of making a decisive impact on the eradication of poverty by 2010. One of the key indicators is the percentage falling below 60% of median income in each country. This is best regarded, according to the EU group which constructed the indicators, as identifying those “at risk of being poor” rather than strictly a measure of poverty.



Ireland is one of a number of EU countries which, over the past 10 years, has had a relative income poverty risk of close to 20 per cent. Denmark and the Netherlands, on the other hand, belong to a group of countries which have had relative income poverty risk of about 10 per cent. What accounts for this persistent difference in relative income poverty risk?

 

 

  • Differences in age and employment profiles, household composition and single parenthood do not explain much of the variation between countries.
  • Simulation with a tax-benefit model shows that differences in tax and welfare rates and structures help to explain a large part of the gap in relative income poverty risk.
  • Children face a higher relative income poverty risk in Ireland than the EU average (26 per cent as against an average of 19 per cent)
  • Recent increases in Child Benefit have had a significant impact in reducing child poverty, and Irish cash income support for children is now quite high by EU standards.
  • The relative income poverty risk for the elderly is much higher in Ireland than elsewhere in the EU (44 per cent as against an EU average of 19 per cent)
  • Raising Irish welfare coverage and support rates to Danish levels would substantially reduce the numbers “at risk” of poverty. However funding Danish-style payment rates and coverage would mean substantial extra taxation. The implications for economic incentives, behaviour and economic growth would have to be taken into account

This paper, "Relative Income Poverty Risk: What can Ireland Learn from the Best-Performing Countries?" by Tim Callan and Brian Nolan (ESRI), will be presented at the “Budget Perspectives Conference”, co-hosted by The Economic and Social Research Institute and the Foundation for Fiscal Studies. Members of the Press are invited to attend the Conference, which will take place on Tuesday, 12th October, 2004, from 9 a.m. to 1 p.m. at the Hilton Dublin Hotel, Charlemont Place, Dublin 2.