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Who is better off?

22 February 2021

Adele Bergin and Seamus McGuinness reflect on cross-border differences in living standards, opportunities and quality of life on the island of Ireland.

In recent times factors including the shared island initiative and the debate on possible constitutional change have increased the focus on north-south issues on the island of Ireland. Yet little is known about how Northern Ireland and the republic actually compare in many areas. In our paper in ISIA we compare living standards across a broad number of dimensions including income, opportunities for life progression and general well-being so that any differences can be better understood. Overall, differences in living standards generally favour the republic of Ireland.

One measure used to assess living standards is household disposable (after-tax) income. Disposable household income was $4,600 higher in the republic than in Northern Ireland in 2017, equating to a gap of approximately 12% after accounting for differences in prices (i.e. adjusting for the different costs of buying similar goods and services) between both areas. This a reliable measure for use in standard of living comparisons. However, it ignores how income is distributed across the population and, probably more importantly, the risk of poverty. Households are considered to be at risk of poverty when their income is less than a particular threshold. Setting the threshold at 50% of the median income (mid-point in the scale of the highest to the lowest of all incomes), reveals that the proportion households at risk of poverty was 8.9% in the republic compared to 14.3% in Northern Ireland. Our analysis also suggests that the tax and welfare system in the republic tends to be much more progressive, and effective in mitigating household poverty risk, than that which prevails in Northern Ireland.

To capture opportunities for life progression we focus on education enrolment across the life-cycle. Access to and take-up of high-quality educational provision is the single-most important factor determining career success, wage growth and social progression and, therefore, can be interpreted as a key measure of opportunity in each region. Human capital development will also strongly determine regional macroeconomic outcomes, such as productivity levels and therefore ultimately, growth rates. Examining education enrolment rates by age reveals that across all ages enrolment rates are lower in Northern Ireland than in the republic. For example, the rate of young people (those aged 15–19) enrolled in post-compulsory programs is 93% in the republic compared to 74% in Northern Ireland. Rates of enrolment among 20–29-year olds in the republic are almost double that of Northern Ireland, indicating higher levels of participation in third-level education. It is unclear whether the difference in education enrolment rates is driven by access or take-up of education (or both). 

Another indicator of life opportunity is the rate of early school leaving. Early school leaving is measured as the proportion of individuals aged 18 to 24 who have finished no more than a lower secondary education and are not involved in further education or training. According to OECD data, the rate of early school leaving in Northern Ireland is almost twice that of the republic; in 2018, 9.4% of young people in Northern Ireland were classified as early school leavers compared to 5.0% in the republic. Our analysis indicates that early school leaving is much more heavily concentrated in Northern Ireland among males and those with working class backgrounds compared to the republic. Overall, opportunities for individual progression afforded to individuals and/or the take-up of these opportunities through education provision appears to be more restricted in Northern Ireland than in the republic.

Differences in income, education as well as health and other factors will together generally determine life expectancy in a region.  As such, life expectancy can be interpreted as a cumulative measure of differences in general welfare and living standards across regions and countries. In 2018, life expectancy at birth in the republic exceeded that of Northern Ireland by 1.4 years and while female life expectancy was above that of male life expectancy, as is common in many Western countries, the gap was marginally larger for females at 1.5 years compared to 1.4 years for males.

We hope this comparative work on living standards In the republic and Northern Ireland will inform policymakers, the business community and public debate on north-south issues and form part of the evidence base in discussions of these issues.

Read the full article, ‘Who is Better off? Measuring Cross-border Differences in Living Standards, Opportunities and Quality of Life on the Island of Ireland’, as it appears in our journal Irish Studies in International Affairs.

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