Comparing Living Standards: North and South

Prof John Doyle

As a QUB graduate, I was pleased to see Queen’s Policy Engagement publish the article by Dr Graham Gudgin entitled “Who is better off, Northerners or Southerners?”  There are strongly held views on whether the current debate on possible referenda on Irish unity is necessary or useful at this time, but what can be widely agreed is that holding a referendum in the absence of prior research and informed debate on the options and their consequences would be a disaster.

In that regard serious research on what might be involved in a referendum on Irish unity, including constitutional issues, economic implications, future health policy etc. is important.  If a referendum is called, it will be too late to do that research and seek to discuss it in the white heat of a referendum campaign.  In that context, a programme of peer-reviewed research led by the Royal Irish Academy and the University of Notre Dame, including academics in all the universities on the island of Ireland, has been initiated under the title ARINS – Analysing and Researching Ireland North and South, to conduct that research now and publish it in ‘open access’ format for debate.

I write in response to Graham Gudgin’s article, as the editor of Irish Studies in International Affairs, the peer-reviewed journal which published the research by Adele Bergin and Seamus McGuinness of the Economic and Social Research Institute, and which Graham Gudgin characterizes as an attempt to use “the discredited Irish National Accounts” to make their case that living standards are higher in the Republic of Ireland, than Northern Ireland.  Earlier work by Bergin and McGuinness of a similar nature was published by the Cambridge Journal of Economics.  It would be extraordinary indeed if both journals were so poor in their peer-reviewing as to allow work to be published using ‘discredited accounts’.  The work I edited and published also included a response paper by John Fitzgerald, making very minor critiques and largely accepting the results of the research.

Bergin and McGuinness have assessed living standards north and south, using household disposable (after-tax) income, a reliable and often used measure in standard of living comparisons. 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, including different housing costs). Going beyond average incomes they also explore how income is distributed across the population and the risk of poverty. Using a common measure where households are considered to be at risk of poverty when their income is less than 50% of the median income in a given state/region, reveals that 8.9% of individuals belong to households defined as ‘at risk of poverty’ in the Republic compared to 14.3% in Northern Ireland.  This difference in poverty levels is primarily a result of the impact of tax and welfare systems, rather than pre-tax incomes. The contemporary tax and benefits systems in the Republic are much more progressive, and more effective in mitigating household poverty risk, than the equivalent systems in Northern Ireland.

As 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 education also strongly influences economic outcomes including productivity levels, growth rates and wage levels, Bergin and McGuinness take a close look at education outcomes. Enrolment rates in education are lower in Northern Ireland than in the Republic in all age ranges. For example, 93% of those aged 15–19 are enrolled in post-compulsory education in the Republic compared to 74% in Northern Ireland. Rates of enrolment in education among 20–29-year olds in the Republic are almost double that of Northern Ireland, indicating higher levels of participation in third-level education. Early school leaving – defined 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, is also high in Northern Ireland. According to OECD data on 2018, 9.4% of young people in Northern Ireland were classified as early school leavers compared to 5.0% in the Republic.  Their analysis also 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.

In his dismissal of the work by Bergin and McGuinness and by extension the quality of journals who review it and publish it, Graham Gudgin has provided no data or analysis to support any of his claims, relying on an unsubstantiated claim that the “view of the Northern Ireland economy from southern economists has always been jaundiced and self-serving”.  A reference by Gudgin to “Spending by households and by government on behalf of households” is not a standard measure of living standards. As Bergin and McGuinness point out in their paper, it is a poor measure of living standards as it ignores the proportion of income that is saved. In quoting Fitzgerald and Morgenrath, Gudgin claims that they did not adjust their measure for differences in price levels when, in fact, they did.  Graham Gudgin also seems to have made a further adjustment for differences in house prices in NI vs GB, but if such adjustments are about standard of living they should be based on average housing costs and not current house prices, and the differences in average housing costs (rather than current house prices) across the UK regions are quite modest.

The purpose of the research and indeed this response is not to start a competition, or even purely to defend the article.  The ARINS project has also commissioned work on comparing the health systems in Northern Ireland and the Republic which may well tell a different story.

A debate on potential political change needs to be able to reply on rigorous research, properly debated.  The work and debate are important and deserve better than unevidenced dismissals.

[This post was originally published by Queen’s Policy Engagement]
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