Report Examines the Gender Impact of Tax-benefit Policy and Public Sector Pay Changes Over the Recession.

Results are a product of new ESRI approach which could be further developed to equality-proof budgets.

An innovative approach to examine the gender impact of tax, welfare and public-sector pay changes has been developed by the ESRI. The ESRI’s new Microsimulation Method for Equality Analysis (MMEA) uses the Institute’s tax benefit model to assess the impacts of policy change on men and women, based on a large-scale nationally representative survey.

A new study co-published today (3rd October 2014) by the ESRI and the Equality Authority applies this new ‘MMEA’ approach. The study, The Gender Impact of Tax and Benefit Changes: A Microsimulation Approach examines how the incomes of men and women have been affected by tax-benefit and public-sector pay policy changes between 2009 and 2013.Although the tax and welfare systems are not permitted to discriminate by gender, tax-benefit changes may affect men and women differently because of gender differences in patterns of employment, wages and benefit receipts.

The study finds that for single women and men of working age the impacts of austerity policies – including public-sector pay cuts as well as tax and welfare changes – were broadly similar, with average losses in disposable income of close to 10 per cent. By contrast, there were losses of about 5 per cent for single people of retirement age. Couples of working age lost, on average, 12% of disposable income while retired couples lost just over 4%. These age related differences are driven by the fact that social welfare rates for those over 65 were not cut in 2010 unlike those paid to people under 65.

Assessing the impact on men and women who are living as a couple is more difficult, as is recognised in international and national research.

This study allows for two alternative possibilities:
• that men and women in couples share resources in a relatively equal fashion
• that incomes directly received by men and women influence the extent to which income is shared

Within couples, women saw sharper losses in individual disposable income than men at all income levels – about 14 per cent for women in couples as against 9 per cent for men in couples. A key driver of this difference was the reduction in Child Benefit, typically received by mothers. Public-sector pay changes and social welfare reductions also had a stronger effect on women than men. Whether such differences translate into differing impacts on men’s and women’s living standards depends on the degree to which couples share their incomes. Recent evidence in another ESRI study (Watson et al, 2013) suggests that equal sharing of resources is a good approximation for most Irish couples.

Summarising the research, Dr. Claire Keane of the ESRI said “Policy changes have imposed similar income losses on single women and single men. Within couples, however, losses have been sharper for women than men, especially for poorer income groups. If couples share their income fully this may have limited impact; but otherwise the greater losses for women in couples may have an effect on bargaining power and welfare within couples”.

Although the focus here is on the distributional effect of Budgets 2009-2013, this report has developed an approach that could be used to examine the gender impact of potential policy changes before they occur. Furthermore, the method used could also be extended for use with other equality grounds such as disability, age or family status.

Welcoming the report Ms Orlagh O’Farrell, Acting Chairperson of the Irish Human Rights and Equality Commission said: “To promote equality in practice between men and women we need to challenge assumptions of gender neutrality in public policy. This report confirms the need for the systematic ‘gender proofing’ of budget policy.”

For further information on the research please contact:

Dr Claire Keane (Research Officer, ESRI), +353 1 863 2012, claire.keane@esri.ie
Professor Tim Callan (Research Professor, ESRI), +353 1 863 2018, tim.callan@esri.ie

Notes for Editors
1. A briefing for members of the media is being held at 10.30am, 2 October 2014.
The report The Gender Impact of Tax and Benefit Changes: A Microsimulation Approach, by Claire Keane, Tim Callan and John Walsh (ESRI) will be published on the 03 October 2014, at 00.01 on the ESRI website. The embargo is until 00.01 03 October 2014.

2. The study published today was funded by the Equality Authority and is jointly published by the Equality Authority and the ESRI.

3. This new research on gender impact of tax and welfare changes was made possible by use of the ESRI’s tax benefit model, SWITCH. SWITCH is a microsimulation model that uses a nationally representative sample of households to examine the impact of actual, or potential, tax-benefit and public sector pay policy changes on household incomes.

4. The present study includes the effect of changes in income-based taxes (including income tax, PRSI and USC), property tax, social welfare and public sector pay. It complements existing research on impacts across income groups and age groups. The impact of non-policy factors – such as unemployment or changes in market wages – on men and women is also of interest, is not included here but has been examined in another study for the Equality Authority (McGinnity et al (2014) “Winners and Losers? The Equality Impact of the Great Recession in Ireland”)

5. The report finds little or no gender differential impact on income of tax-benefit changes amongst singles. Single, childless males of working age saw a reduction of 9.3% in their income due to the 2009-2013 tax-benefit changes while single, childless females of working age saw a reduction of 9.9%. Female lone parents had their income reduced by 9.1%. Single, retired males and females both saw a reduction in income of 4.5%. Amongst couples, those of working age saw a reduction in their joint income of close to 12% while couples of pension age saw a much lower reduction of 4%.

6. The Equality Authority is a State Agency which is mandated to promote equality and eliminate discrimination in the workplace and in the provision of goods and services, accommodation and education. The Equality Authority is currently merging with the Irish Human Rights Commission to form the Irish Human Rights and Equality Commission (IHREC).

Contact details:

The Equality Authority, 4th Floor, Jervis House, Jervis Street, Dublin 1. Telephone: +353 1 4173336; Fax +353 1 4173331; email: info@equality.ie; web site: www.equality.ie