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The Changing Nature of Irish Wage Inequality from Boom to Bust

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  • Holton, Niamh

    (Nevin Economic Research Institute)

  • O'Neill, Donal

    (National University of Ireland, Maynooth)

Abstract

The dramatic change in economic conditions in Ireland over the last 10 years provides an opportunity to examine the impact of large macroeconomic shocks on inequality. We analyse wage inequality in Ireland from the height of an economic boom, through a very deep recession, to the start of a recovery. In keeping with previous work we find that dispersion in wages increased towards the height of the boom, driven largely by rising returns to skills. However, the economic crisis of 2008-2013 was accompanied by a significant reduction in earnings dispersion. Although the improving characteristics of the work force increased wages for everyone over this period, these increases were offset by falling returns to skills. Only workers in the lowest decile were unaffected by the declining returns, resulting in wage growth at the bottom of the distribution and a decline in inequality during the recession.

Suggested Citation

  • Holton, Niamh & O'Neill, Donal, 2015. "The Changing Nature of Irish Wage Inequality from Boom to Bust," IZA Discussion Papers 9580, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9580
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    1. repec:ces:ifodic:v:16:y:2019:i:4:p:50000000004804 is not listed on IDEAS
    2. Paul Redmond & Seamus McGuinness, 2019. "Assessing the Impact of the Minimum Wage in Ireland," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 16(04), pages 23-26, January.
    3. Logue, Caitriona & Colgan, Brian & Callan, Tim, 2016. "Low Pay, Minimum Wages and Household Incomes: Evidence for Ireland," Papers BP2017/3, Economic and Social Research Institute (ESRI).
    4. Roantree, Barra & Barrett, Michelle & Redmond, Paul, 2022. "Poverty, income inequality and living standards in Ireland: 2nd annual report," Research Series, Economic and Social Research Institute (ESRI), number JR1.
    5. Paul Redmond & Karina Doorley & Seamus McGuinness, 2021. "The impact of a minimum wage change on the distribution of wages and household income," Oxford Economic Papers, Oxford University Press, vol. 73(3), pages 1034-1056.
    6. Redmond, Paul & McGuinness, Seamus, 2021. "The impact of the 2016 minimum wage increase on average labour costs, hours worked and employment in Irish firms," Research Series, Economic and Social Research Institute (ESRI), number RS118.
    7. Redmond, Paul & Doorley, Karina & McGuinness, Seamus, 2019. "The impact of a change in the National Minimum Wage on the distribution of hourly wages and household income in Ireland," Research Series, Economic and Social Research Institute (ESRI), number RS86.
    8. Nóirín McCarthy & Peter W. Wright, 2018. "The Impact of Displacement on the Earnings of Workers in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 49(4), pages 373-417.
    9. Cathal O’Donoghue & Jason Loughrey & Denisa M. Sologon, 2018. "Decomposing the Drivers of Changes in Inequality During the Great Recession in Ireland using the Fields Approach," The Economic and Social Review, Economic and Social Studies, vol. 49(2), pages 173-200.
    10. Redmond, Paul, 2020. "Minimum wage policy in Ireland," Papers BP2021/2, Economic and Social Research Institute (ESRI).
    11. Roantree, Barra & Doorley, Karina, 2023. "Poverty, income inequality and living standards in Ireland: Third annual report," Research Series, Economic and Social Research Institute (ESRI), number JR4.

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    More about this item

    Keywords

    returns to skill; composition bias; inequality;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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