My good friend and former colleague, Professor Jim Walsh of Maynooth University, has recently published a fascinating book on incomes within Ireland.
It would be impossible to satisfactorily deal with the richness and complexity of Jim’s book in a short article, but it’s worth looking at some of the insights that emerge in respect of income developments in rural areas.
There’s now clear evidence of a convergence in living standards between rural and urban areas after several years of a persistent large disparity.
Between the years 2004 and 2008, which would have been indicative of trends before then, disposable household incomes (adjusting for the composition of households and the cost of living) in urban areas were running at about 20% above incomes in rural households.
In the aftermath of the 2008 recession and right up to 2019 (the last data point available), there has been a steady convergence in incomes between rural and urban areas. By 2019 the urban-rural income divide had shrunk to about 3%.
Another very positive development is that the percentage of the population at risk of poverty, which is defined as those households whose income is below 60% of median total household income, has fallen in rural areas from just under a quarter in 2004 to about 12% in 2019.
Over the same period, there was a relatively much lower decline in the numbers at risk of poverty in urban areas, from about 16% in 2004 to around 15% in 2019. So effectively the urban and rural rates have not only declined but the rate in both areas is now similar.
These two positive trends are as a result of underlying complex changes in occupations, incomes and location patterns of household settlement as between urban and rural areas.
During the 2008 recession and its aftermath, the agriculture and food industry proved to be far more resilient than other sectors.
This effect, however, can’t explain the persistent improvement in rural income levels and the associated reduction in relative urban-rural poverty levels.
It’s most likely that larger numbers of higher income earners are settling in rural areas.
This development is creating a more dynamic rural environment which, among other things, is resulting in a more attractive backdrop for off-farm employment opportunities in rural areas. It’s highly likely that COVID-19 has accelerated the trend towards higher settlement in rural areas.
The income performance at county level is most interesting.
In 2018, with the exception of counties Galway and Leitrim, the remaining counties in the northern and western regions, along with counties Longford, Westmeath, Offaly and Laois in the eastern and midland regions had the lowest disposable income per person, ranging from €16,500 to €18,300.
The highest income per person, at between €21,900 to €25,000, was achieved in counties Dublin, Kildare and Limerick.
The change in disposable income per person over the period 2000 to 2018 in counties Mayo, Roscommon, Longford, Westmeath, Offaly and Laois, at between 49%-55%, was substantially less than the 68%-87% achieved in the top-performing counties.
What’s surprising is that Limerick stands alone as the highest performing county, at up to an almost 90% increase in disposable income over the period, despite the level of income languishing behind Dublin and Kildare in 2000.
The factors driving the income performance include, educational attainment, occupation and economic sector. Educational attainment emerges as clearly important across all sectors and locations.
In general there’s a 150% income premium for university graduates, compared with those that only have primary education.
The income gap between the top-earning occupations and farmers is an extraordinary 294%. This is also reflected in the relative sectoral income performance.
For instance, total income earned in the agriculture, fishing and forestry sector is about 63% of that earned in the public service, education and health sector.