The research found that the younger and more highly educated population of the Republic of Ireland results in lower income inequality

Income inequality similar in Republic and NI - ESRI

by · RTE.ie

New research has found that income inequality is very similar in the Republic of Ireland and Northern Ireland despite marked differences in demographics, working patterns, wage levels and the tax-benefit system.

According to the study, these factors are likely to contribute differently to how income is distributed in the two jurisdictions.

The findings are part of a research programme between the Department of the Taoiseach's Shared Island Unit and the Economic and Social Research Institute (ESRI).

Drawing on data from 2019, the study examines the drivers of income inequality on the island of Ireland.

The research found that the younger and more highly educated population of the Republic of Ireland results in lower income inequality as there are relatively fewer people with no earnings.

On the other hand, the higher and more unequal wages paid to workers result in relatively higher market income inequality.

The study also found that while the Irish tax system is more progressive and reduces income inequality more than the Northern Irish tax system, the level and coverage of means-tested benefits in the Republic of Ireland is lower than Northern Ireland.

"Therefore, the Irish means-tested benefit system reduces inequality less than the Northern Irish means-tested benefit system," according to the report.

"The combination of these two opposing effects results in similar overall levels of redistribution by the Irish and Northern Irish tax-benefit systems taken as a whole," it concludes.

Report co-author and Associate Research Professor at the ESRI Karina Doorley said that the research sheds light on possible future developments in income inequality on the island of Ireland.

"Current trends in population ageing and upskilling are likely to affect the distribution of pre-tax and transfer income in both Ireland and Northern Ireland," Dr Doorley said.

"The latter is likely to be particularly important in Northern Ireland, where baseline levels of education are lower," she added.