The Distribution of Income in Ireland (2000) - Combat Poverty Agency

14 The Distribution of Income in Irelandby equivalisation, using alternative equivalence scales. Thedistributions of equivalised household income among householdsand among persons are also compared. Section 3.4 analyses thecomponents of change in the distribution between 1994 and 1997.Section 3.5 examines where different types of household tend tobe located in the distribution. Section 3.6 presents some initialresults for 1998. Finally, Section 3.7 summarises the main findingsof the chapter.3.2 THE DISTRIBUTION OF DISPOSABLE INCOME AMONGHOUSEHOLDS IN 1994 AND 1997We begin by examining the distribution of disposable income -the income concept which has the most direct relevance forability to spend — among households in the 1994 and 1997Living in Ireland Surveys (LII). Table 3.1 shows the share in totalincome going to each decile. We see that in each year the bottom10 per cent of households had about 2 per cent of total income,while the top 10 per cent had about one-quarter of thetotal. In broad terms a similar shape for the income distributionis seen in other industrialised countries, and the comparisonwith other EU and OECD countries presented in Chapter 5 willhelp to put Ireland's distribution in perspective. For the present,though, we concentrate on the Irish pattern and on how ithas been changing between 1994 and 1997.Two inequality measures designed to summarise the degreeto which incomes are concentrated are also shown in Table 3.1,namely the Gini and Theil measures. As mentioned in the previouschapter, different inequality measures put most weight onincome differences in different parts of the distribution, and allsuch measures will not always display the same trends, so it isworth looking at more than one. We see from the table thatthese summary measures calculated for disposable incomesuggest little difference in the level of inequality between the1994 and 1997 surveys. However, looking at the decile shareswe see that this overall stability masks the fact that there was aslight shift away from both the bottom and the top of the distribution,with those in the middle gaining.The Distribution of Income in the 1990s 15Table 3.1: Decile Shares and Summary Inequality Measures,Disposable Income among Irish Households, 1994and 1997 Living- in Ireland SurveysDecileBottom23456789TopAllGiniTheilShare in Total DisposableIncome (%)1994 LII2.33.34.66.07.59.111.113.516.526.4100.0Inequality Measure0.3770.2371997 LII2.13.34.56.07.79.511.213.416.525.8100.00.3730.236As well as shares, it is worth stating the actual income levels requiredto bring one into for example, the top 10 per cent of thedistribution, and what constitutes an "average" income. In 1997,the median point in the disposable income distribution amonghouseholds — the point which splits the distribution exactly intwo — was about £290 per week or £15,100 per annum. The incomecut-off for the top decile — the lowest income which wouldbring a household into the top 10 per cent — was about £630 perweek or £32,700 per year. The income below which a householdwould be in the bottom 10 per cent, on the other hand, was about£84 per week or £4,400 per year. No account has been taken sofar of differences in household size and composition, which obviouslyaffect the living standard one can reach on these variousincome levels. It is instructive none the less to know what theseabsolute figures are, since there may be widespread misper-