Irish income distribution ‘more equal’ than OECD average

Organisation for Economic Cooperation and Development publishes report

Income distribution among Irish households was ‘more equal than the average in the Organisation for Economic Cooperation and Development in 2010’

Income distribution among Irish households was ‘more equal than the average in the Organisation for Economic Cooperation and Development in 2010’

 

Income distribution among Irish households was more equal than the average in the Organisation for Economic Cooperation and Development in 2010, according to a report published today by the think tank.

Both of the indicators used to measure equality of income showed Ireland had a more even distribution than the average across the 34-nation bloc, which comprises most of the world’s highest-income countries and a handful of middle-income ones.

The average incomes of the top-earning 10 per cent of Irish households were 7.5 times greater than those in the bottom 10 per cent in 2010.

The OECD average in that year was a difference of 9.4 times between the top and the bottom deciles. Iceland, Slovenia and Denmark had the smallest gaps (5.3 times). Mexico, Chile and the United States were the most unequal, with gaps of 28.3, 26.5 and 15.9 times respectively.

The Gini coefficient is the second measure of income inequality used in the report (a score of zero would signify all households having identical incomes, while a score of 100 would mean all income going to one household).

The report shows Ireland’s Gini coefficient stood at 30.7 in 2010, compared to an OECD average of 31.3.

By this measure, Iceland also came out as the country in which income is most evenly distributed, scoring 24.4.

Chile was the most unequal with a Gini coefficient of 50.1.

The report finds that the economic crisis had the effect of increasing inequality of earned income in most OECD countries, but that welfare systems offset the effects on inequality when total incomes (including social transfers) are considered.

In the three years to 2010, Irish households suffered the seventh-largest decline in market income (ie before welfare benefits) in the OECD.

The decline was just over 5 per cent, compared with an average decline of 2 per cent. Icelandic households suffered the largest decline in market incomes, at 12 per cent.

Polish households were at the other extreme, with market income growth of 3 per cent between 2007 and 2010.

The picture for household income changes considerably in most countries once the cushioning effects of social welfare systems are taken into account.

In Ireland average household disposable income, which includes social transfers, fell by just under 4 per cent in the three years to 2010.

Social transfers boosted disposable income by 2 per cent over the same period, the joint highest effect of transfers, along with Finland and New Zealand.