Jason Loughrey

Using the EU-SILC to model the impact of the economic crisis on inequality

In this paper we attempted to chart the impact of the early part of Ireland’s economic crisis from 2008–2009 on the distribution of income. In order to decompose the impact of changes in different income components, we utilised a microsimulation methodology and the EU-SILC User Database. This simulation based methodology involved the disaggregation of the 6 main benefit variables in the EU-SILC into 17 variables for our tax-benefit model. Validating, our results were positive, giving us confidence in our methodology. We utilised the framework to model changes in the level of income inequality from the period just before the crisis in 2004 to the depth of the worst year of the crisis in 2009. In terms of the impact of the economic crisis, we found that income inequality fell in the early part of the crisis modelled in this paper. Much of this change was due to rising inequality of market incomes, (even when discounting unemployment). This was due to the differential effect of the downturn on different sectors where some sectors such as the construction and public sectors were significantly hit, while the international traded sectors have been relatively immune from the downturn and have seen continued growth. The impact of the tax-benefit system has been to mitigate this upward pressure, with a gradual rise in the redistributive effect of the tax-benefit system driven by an increase in demand on the benefits side and increased progressivity on the tax side.Jel codesH22, H55, C15

Hidden Underemployment Among Irish Farm Holders 1996-2011

This paper examines the factors driving hidden underemployment on Irish farms during the course of the economic boom in Ireland and the subsequent economic decline post 2008. This measure of hidden underemployment is due to differences between the farmer‟s reported amount of labour and the standard labour requirement estimated in the Teagasc National Farm Survey. Hidden underemployment can be attributed to a number of factors relating to inadequate employment situations as described at the 16th International Conference of Labour Statisticians (16th ICLS) such as low productivity, casual work practices and the poor utilisation of skills and other factors specific to agriculture and/or self employment. We place particular attention upon the potential role of off-farm labour supply in solving the underemployment problem. We use a two-stage residual inclusion model and a random effects probit model to examine the forces behind farm underemployment. This paper provides an interesting set of results given that the end of the economic boom phase co-incided closely but not precisely with the decoupling of farm-level subsidies in 2006.

The Spatial Distribution of Household Disposable Income

Although not development policies per se, taxation and social policy, as amongst the biggest line items in terms of expenditure and revenue in the state budget, have a very important impact on the distribution of welfare both across families of different incomes and types and across space. Since the early 1990s in Ireland there has been a growing emphasis on spatially targeting policy options in the area of poverty and social exclusion. For example, the National Anti-Poverty Strategy (1997) has a spatial dimension in two of its five priority themes: disadvantaged urban areas and marginalised rural communities. The National Spatial Strategy (2002) presents a national programme of development actions to reduce inter-regional inequality. Within these frameworks, local Partnerships have been utilised as a mechanism to target resources at poverty “blackspots” (Haase and Foley 2009).

Farm income variability and off-farm employment in Ireland

Purpose - The purpose of this paper is to identify the potential relationship between farm income variability and off-farm employment decisions in the short and medium term for the case of Irish farm operators. Design/methodology/approach - Panel probit models of off-farm labour supply are estimated using Teagasc National Farm Survey data for Irish farms. The framework is based largely on standard expected utility but includes a constraint for recent employment history. Findings - The analyses identifies some evidence of a positive association between farm income variability and off-farm employment in the medium term but no significant relationship in the short term. This suggests that off-farm employment is part of a wider portfolio decision but is not a strong solution to short-term farm income shocks. Practical implications - European farmers increasingly face high income variability but financial risk management tools are not sufficiently developed or widely accessible to assist farmers in managing the associated risk. This deficiency can have negative implications for household economic welfare and future farm investments and hence the future farm income. Off-farm employment can form part of a wider medium-term portfolio strategy but more effective tools are also required for risk management particularly in dealing with short-term volatility and where off-farm employment is not a realistic endeavour given time constraints and/or demographics. Originality/value - The estimation of farm income variability includes a detrending method thus reducing the likelihood of overestimating farm income variability for farms in deliberate expansion or decline. While previous research has typically focused on the short-term response of farmers to historical farm income variability, this research has distinguished between the short and medium term.