ten - The evolution of child poverty in Ireland

Summary

Introduction

This chapter uses new data to explore the evolution of child poverty in Ireland over the past decade. The relative position of households with children deteriorated sharply in Ireland during the 1980s, as analysed in detail in Nolan and Farrell (1990). The macroeconomic environment has been very different since then, with stagnation replaced by economic growth reaching record levels since 1994. How have children fared? We seek to answer this question using household survey data up to 1997.

We begin with a very brief discussion of the macroeconomic and policy context and the data to be employed. We then present relative income poverty rates for Irish children from the early 1970s up to 1997. Nonmonetary indicators of deprivation are then used to show that relative income poverty rates provide a rather partial picture in a situation of rapid growth. Finally, the implications for poverty measurement and policy are highlighted.

The macroeconomic and policy context

The central feature of the Irish economy from the 1970s has been exceptionally pronounced fluctuations in economic growth. Following a misplaced fiscal pump priming in the late 1970s, there was little or no economic growth from 1980 to 1987 as the government struggled to bring the public finances under control. In each of the years from 1987 to 1994, on the other hand, growth in real Gross Domestic Product (GDP) exceeded both the European Union and OECD average. Economic growth has been even more rapid since then, with GDP increasing by 7% to 8% per annum – the ‘Celtic Tiger’ phenomenon. The factors producing this growth are many and the balance between them debated (see for example Bradley et al, 1997; Barry 1999).

Unemployment rose very rapidly during the 1980s, reaching 18% of the labour force, with long-term unemployment accounting for a particularly high proportion. Unemployment proved initially resistant to the renewal of economic growth, still remaining as high as 16% by 1994, but subsequently fell rapidly, down to 11% by 1997 (and has fallen a good deal further since then). Again with something of a lag, longterm unemployment has also now fallen very considerably.

As well as unemployment, tax and social security policies during the 1980s tended to disadvantage families with children. Up to the late 1980s, social security pensions were seen as targeting resources to a needy group without distorting financial incentives to work and received priority over unemployment compensation.