Friday, November 19, 2021

Ireland in the Global Income Distribution

Here is a website that has an interactive chart showing the position of a country’s income distribution within the global distribution.  The ventiles (one-twentieths) for each country ranked along the horiontal axis where their position in the world income distribution given on the vertical axis.  The example below shows Ireland.

Ireland in the Global Income Distribution

It shows that most incomes in Ireland are towards the top of the global income distribution (in price-adjusted terms).  Ireland’s first ventile (the bottom 5 per cent) were located at around the 65th percentile of the global income distribution with the second ventile at around the 80th percentile.

As the chart title indicates the estimates, which are based on the work of Branko Milanovic, are based on data that is around ten years old.  There have been significant changes in Ireland since then – the country is no longer facing the teeth of a deep recession – and these have led to large changes at the bottom of the income distribution.

Cut Offs for Lowest Income Percentiles

The post-2008 crash resulted in large drops for the cut-off points of the percentiles that make up the lowest ventile of Ireland’s income distribution.  The first chart compares Ireland’s position in the global income distribution at a time when the income of the lowest ventile was unusually low.

After 2014, there was very strong income growth for these percentiles with a doubling of the incomes shown in just five years.  It is possible that average income of the bottom 5 per cent in Ireland would be placed at around the 85th percentile in the current global income distribution.

The at-risk-of-poverty threshold at 60 per cent of the national median is currently around €15,000 for a single person (or €32,000 for a 2+2 family).  This income would be at around the 90th percentile of the global income distribution.

The interactive tool can be used to make find some unusual comparisons.  There is the example of South Africa where, in the 2011 data, the average income of the top five per cent was comparable to the income of the top 5 per cent in Ireland but where the bottom five cent were amongst some of the lowest incomes in the world.  Or Nigeria where the average income of the top five per cent is lower than the income of the bottom five per cent in Ireland.

Ireland South Africa Nigeria

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