Friday, November 6, 2020

The convergence of urban-rural incomes in the SILC

In recent years, the Survey of Income and Living Conditions has shown remarkable improvements for Irish households with significant rises in income and significant falls in inequality.  One feature within the findings has been the narrowing of the urban-rural divide.

To start, just look at real income.

SILC CSO Median Real Equivalised Disposable Income Urban-Rural 2004-2018

In 2013, median real equivalised disposable income in rural areas was just 85 per cent of that in urban areas.  For the past couple of years it has been 95 per cent or higher.

For the purposes of the SILC, households are classed as living in an urban or rural area based on population density (as measured by the 2016 Census).  Areas with a population density of less than 1,000 per square kilometre are classified as rural.  In 2019, 30.9 per cent of the weighted sample were in rural areas.

With incomes by area we can also look at at-risk-of-poverty rates by area.  This is the percentage of people living in households with an equivalised income below 60 per cent of the national median.  For 2019, the threshold used by the CSO was an income after taxes and transfers of €33,400 for a household of 2 adults and 2 children.

In previous years, as the rural category had a lower income, it had a higher at-risk-of-poverty rate. This reversed in 2019.

SILC CSO At-Risk-Of-Poverty Rate Urban-Rural 2004-2018

We don’t have inequality figures by status but this could be taken to imply that there is less inequality in rural areas at the bottom of the income distribution.

The at-risk-of-poverty rate is a relative income measure.  To help with understanding differences in living conditions we can look at deprivation rates.  This is the percentage of individuals living in households who experience two or more items of deprivation from a list of 11.  According to the CSO for the population as a whole:

In 2019, the most common item of deprivation experienced was the inability to afford to replace any worn out furniture (18.1%), followed by being unable to afford to have family or friends for a drink or meal once a month (13.6%) and being unable to afford a morning, afternoon or evening out in the last fortnight (11.7%).

Here are the rates for urban and rural areas.

SILC CSO Deprivation Rate Urban-Rural 2004-2018

These have always been closer than the income levels or at-risk-of-poverty rates might imply.  This is likely because those in rural areas face a lower price set compared to those in urban areas, most notably for housing.

Over the past few years, rural area have had a lower deprivation rate than urban areas and though the fall that had been evident in both since 2013 stopped in 2019, the gap between them increased.  There was no significant change in the deprivation rate for rural areas in 2019 while it rose in urban areas.

Finally, we can look at the consistent poverty rate which is a measure that combines those at-risk-of-poverty and also experiencing deprivation.

SILC CSO Consistent Poverty Rate Urban-Rural 2004-2018

Given what this shows it wouldn’t be out of place to talk about urban-rural divergence in the SILC rather than convergence.  In 2019, the consistent poverty rate for rural areas continued to fall and was less than half what it was in urban areas (3.1 per cent versus 6.5 per cent). 

The “rural Ireland being left behind” narrative is a common refrain.  There is no evidence of it here.  

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