Inequality in the Distribution of Income has Reduced

A new Research Note published today (Monday, 28 July) by the ESRI shows that inequality in income distribution has reduced. The Distribution of Income and the Public Finances , by John FitzGerald, outlines how policies adopted by successive governments have contributed to an outcome where inequality in the distribution of income has reduced since 2007. A major factor leading to this outcome was that the welfare system was relatively unchanged in the face of the massive increase in numbers depending on it. The need for increased taxes and for cuts elsewhere in the economy was greatly increased by the decision of successive governments to protect those on low incomes who were dependent on the welfare system. This policy choice was different from that adopted elsewhere in the EU 15, where income inequality increased significantly as a result of the crisis. Commenting on the research, John FitzGerald said: "Because of the heavy loss of income among high earners and the major reduction in the numbers employed throughout the economy, the burden of increased taxation had to be carried by those on middle incomes"