Economic Growth and Income Inequality

Some reflections/ research problems that emerge from Brian Nolan’s and Bertrand Maitre’s article ‘Economic Growth and Income Inequality: Setting the Context’ in ‘The Best of Times: The Social Impact of the Celtic Tiger’.

This is an interesting article. Two crucial research problems emerge but are not central to the overall text. Firstly. it highlights the different outcomes that emerge depending on what data/ method is used to measure ‘income inequality’. Surveys do not capture the level of income going to the top quintile (no survey can adequately capture a small cluster of people). Taxation revenue presents the top quintile to be earning substantially more than surveys present. This calls into question the adequacy of using household budget surveys as a mechanism to quantify household income. What is the most accurate method to determine whether there has been a widening gap between the lowest and highest income in Ireland over the past 15 years? Furthermore, would an examination of the distribution of national wealth rather than national income produce a different picture of ‘equality’ in Ireland? Diverse definitions of income, inequality, wealth and distribution will produce different social scientific outcomes. This highlights the importance of language (and getting agreement on the precise use/meaning of concepts) in the social sciences.

Secondly, the authors capture the essence of the societal-structural rather than the quantitative problem on page 37. Ireland’s institutional welfare arrangements are ‘historically path dependent’ upon a residual welfare regime. Ireland inherited the British welfare system and has yet to really move beyond it. The research problem as to whether this causes greater levels of income inequality is never explored. That is, does Ireland’s residual liberal welfare regime cause greater levels of income inequality? Or, does Ireland’s mechanism of state intervention (via cash transfers and benefits in kind) decrease levels of inequality? Is this objective of greater equality central or peripheral to Ireland’s national development plans. The article is positive in that it point to choices confronting the state as to what policies to adopt in the future. More precisely it begs the question: How has the welfare state contributed to the national economy? Can NESC’s proposed Developmental Welfare State move beyond a policy document? Who are the main actors that could potentially alter Ireland’s institutional arrangement: social partners? social movements? political parties? an economic crises?

What are the structural restrictions/opportunities that disable/enable Ireland moving beyond a residual liberal welfare regime?

Has Ireland missed the opportunity to invest the increased surplus generated by the Celtic Tiger into welfare state expansion?

One response to “Economic Growth and Income Inequality

  1. This is a good blog. Keep up all the work. I too love to blog. This is great everyone sharing opinions.

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