Income Inequalities in Ireland and Poland: The Role of Taxes and Social Transfers

Keywords: income inequality, source decomposition, Gini coefficient

Abstract

Even though Ireland and Poland differ in their GNI levels per capita, economic history and
economic systems, their levels of income inequality calculated on disposable income were very similar
in 2016. However, there is a lack of current research comparing these countries from the perspective of
tax-benefit systems that alleviate inequality. Therefore, this paper seeks to answer the research question
of whether the differences in welfare state regimes that shape tax-benefit systems in Poland and Ireland
are reflected by the role the taxes and social transfers play in tackling inequality. Our study is based on
microdata from the European Union Statistics on Income and Living Conditions (EU-SILC) survey. We
apply a factor decomposition to determine what roles various factor components play in determining
overall inequality. The results reveal that the redistributive effect was stronger in Ireland, resulting in
greater income inequality reduction than in Poland through policies affecting the unemployed, families
and taxes.

Author Biographies

Joanna Muszyńska, Nicolaus Copernicus University in Toruń, Poland

Faculty of Economic Sciences and Management
Econometrics and Statistics Department
Assistant Professor

Małgorzata Szczepaniak, Nicolaus Copernicus University in Toruń, Poland

Faculty of Economic Sciences and Management

Department of Economics

Assistant Professor

Ewa Wędrowska, Nicolaus Copernicus University in Toruń, Poland

Faculty of Economic Sciences and Management
The Department of Applied Informatics and Mathematics in Economics

Associate Professor

 

Published
2021-12-14
Section
Articles