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

34 The Distribution of Income in IrelandThe shape of the disposable income distribution after adjustmentfor differences in household size and composition,using alternative equivalence scales, was seen to have changedin a similar way to the unadjusted distribution between 1994and 1997. Focusing on the distribution among persons ratherthan households showed a decline in shares for the bottom butnow little change at the top.A decomposition analysis of the distribution of equivalisedincome in 1994 and 1997 looked at inequality within and betweendifferent groups of households, distinguished on the basisof age, gender, labour force status and social welfare dependence.For example, this showed that inequality betweenhouseholds categorised by the labour force status of the headaccounted for about 27 per cent of overall inequality in 1994and 24 per cent in 1997. Within these groups, inequality washighest for households headed by a self-employed person andlowest among the retired.There were also some changes in the location of differenttypes of household in the income distribution. Those in householdsheaded by someone aged between 35 and 64 werespread rather evenly over the quintiles in both 1994 and 1997,but there were considerable shifts for both older and youngerhouseholds. In particular, households headed by someoneaged 65 or over were more heavily concentrated towards thebottom by 1997.Initial results from the 1998 Living in Ireland survey showeda continued decline in the share of equivalised income going tothe bottom 30 per cent of households. This brought the cumulativefall in the share of the bottom 30 per cent from 1994 to 1998up to 1.4 per cent of total income. A declining share for the topdecile from 1994 to 1997 had offset this decline in terms ofoverall inequality, but from 1997 to 1998 the share of that decilerose and so did summary inequality measures.In assessing both the overall shape of the distribution of incomein Ireland and these recent trends, a frame of reference isprovided by comparison with corresponding figures for othercountries. That is the topic of Chapter 5, but first we look inChapter 4 at how the Irish distribution has been evolving over alonger period, back to the early 1970s.Chapter 4Trends in the Irish IncomeDistribution Since 1973Brian Nolan4.1 INTRODUCTIONSo far we have focused on data from the household surveys carriedout by the ESRI in the 1990s. In this chapter we use datafrom a household survey carried out by the ESRI in 1987, andfrom the Household Budget Surveys carried out by the CSO in1973, 1980, 1987 and 1994/95, to see how the Irish income distributionhas been evolving over a longer period. Section 4.2looks at 1987 and 1994, for which estimates of the income distributionare available from both ESRI and HBS surveys. Section4.3 documents trends in the distribution over the period from1973 to 1997. Section 4.4 analyses factors underpinning theselonger-term trends, while Section 4.5 presents an in-depth decompositionanalysis of the 1987-1994 changes. Section 4.6summarises the main findings.4.2 THE INCOME DISTRIBUTION IN 1987 AND 1994We look first at the distribution of disposable income amonghouseholds in the ESRI and CSO samples for 1987 and 1994, inTable 4.1. (We concentrate now on the distribution amonghouseholds rather than persons, because it is only on that basisthat we can push the comparisons back to 1973 in the next section.)We see that in each of the years there was some differencebetween the estimates derived from the ESRI surveys and