County incomes – components of change

A few weeks ago, when the CSO released County Incomes and Regional GDP 2013,  I blogged about the changes in county incomes over the last few years, with a particular focus on 2012 to 2014 (2014 are provisional results).  Disposable Incomes per person had declined between 2012 and 2013 and then risen to 2014 but the components of income which rose and fell during that period are of interest showing how the recovery was occurring and the differences in income sources among counties.

In this post changes in primary income, social transfers, and taxes and charges are all considered to see how they contributed to the changes in Disposable Income per person in the counties of the Western Region.

Disposable Income per person (hereafter referred to as income) fell between 2012 and 2013.  Table 1 below shows the percentage change in each to the components in the seven Western Region counties and the state between 2012 and 2014.

Table 1 Percentage change in of the components of Income between  2012 and 2014

table 2012-20141 Includes imputed rent of owner occupied dwellings

2 Total Household Income does not equal the sum of Primary Income & Social Transfers due to the effect of the Statistical  Discrepancy (-€496m in 2013 at State level).

Source: CSO County Incomes and regional GDP 2013, CSO, 2016 and own calculations.

Primary Income

The different components of Primary Income in 2013[1] are considered here.  As can be seen from Figure 1 the main component of Primary Income is income for compensation of employees followed by income for self-employment, but there is some variation among counties in the importance of each of these.

Figure 1: Components of Primary Income 2013

label com of income 21.03.16Source: CSO County Incomes and regional GDP 2013, CSO, 2016 and own calculations.

 

Compensation of Employees

Compensation of Employees accounts for 78.02% of Primary Income in the state as a whole and is more important in the state figure than in any of the Western Region counties.  Sligo has the highest percentage of Primary Income from Compensation of Employees (77.8%) but in Donegal it only accounts for 73.2% while it is also a lesser proportion in Leitrim, (74.4%), Mayo (74.8%) and Roscommon (74.9%).

The amount of Compensation of Employees grew in all Western Region counties between 2012 and 2014, but growth was small between 2012 and 2013 (in fact it declined in Donegal (-1.4%) and Leitrim (-0.3%) in that period).  Income from Compensation of Employees grew more strongly between 2013 and 2014, by over 3% (but less than 3.5% in all counties and in the state as a whole).

 

Income from Self Employment

Income from Self Employment accounts for a larger proportion of Primary Income in all Western Region counties than in the state as a whole (12.3% of primary income).  It is most significant in Donegal (16.5%) and Leitrim (16.7%).  This reflects the Western Region’s higher share of self employment (without employees) than the rest of the state – 16.3% of all employment in the Region compared with 11.4% in the rest of the state.   Income from Self Employment is least important in Sligo (12.9%) and Galway (13%).

This component of income grew by more than compensation of employees in both 2013 and 2014 (by 5.5% in Leitrim in the period, and by 9.9% in Mayo in the period,(the highest rate of growth in the Western Region).  However it grew by 12.5% in the state during that time.

 

Rent and Income from Interest and Dividends,

These account for a relatively small proportion of primary income.  Income from Interest and Dividends is around 2.4% in most of Western Region counties, as it is for the state as a whole, and income from Rent of Dwellings varies as a proportion of primary income from 6.3% in Leitrim to 7.9% in Donegal (7.2% in the state).

Income from Rent of Dwellings[2] grew by almost a third in all counties between 2012 and 2014, but Income from Interest and Dividends (which are a very small component of income) fell slightly during that period- by more than 4% in Donegal and 1.5% in Sligo.  It fell by 2% in the state.

While Primary Income grew over the period Disposable Income fell, mainly as a result of changes in the other components that of Social Transfers and Taxes.

 

Social Transfers and Taxes

This includes unemployment benefit and assistance, disability benefits, state pensions and children’s allowances.  It makes up a relatively high proportion of Total Income in some counties (Total Income is Primary Income plus Social Transfers[3]).  In the state as a whole, Social Transfers are 22.5% of Total Income which is a lesser proportion than in any of the Western Region counties where it varies from 23.4%in Galway to a very significant 34.4% in Donegal.

The amount of Social Transfers fell in all western counties in both 2013 and 2014.  The reduction in Social Transfers was greatest between 2012 and 2013 during which period Total Household Income fell in most Western Region counties (the exceptions were Mayo and Sligo).

Between 2012 and 2013 Disposable Household Income fell in all counties, while taxes decreased slightly in Leitrim Galway and Clare in that period.  Social transfers continued to decline between 2013 and 2014, (due, at least in part, to employment growth in that period), while the amount of taxation collected grew more significantly. It increased by over 10% in Roscommon between 2013 and 2014, and for the period 2012 to 2014 taxes in Western Region counties grew by between 8.5% in Clare and 14.6% in Mayo.

 

Figure 2: Changes in the Components of Disposable income 2012-2014

changes in componentsSource: CSO County Incomes and regional GDP 2013, CSO, 2016 and own calculations.

 

Conclusion

As Disposable Income is made up of different sources of income and transfers and is also affected by taxation it is important to understand the changes in each of these components when considering changes to income.  The fall in Disposable Income in all Western Region counties between 2012 and 2013 was mainly as a result of the decrease in Social Transfers in that period, as Primary Incomes grew everywhere except Donegal and Leitrim.

In contrast, between 2013 and 2014, despite continued falls in Social Transfers the increase in Primary Income in all counties of the Region was sufficient to ensure that Disposable Incomes increased in all of the Western Region counties except Donegal[4].

 

Helen McHenry

 

[1] It should be remembered that the figures for 2014 are provisional and may be revised next year when they are officially reports.  Therefore when first looking at the different components of Income, 2013 is examined.

[2] This Includes imputed rent of owner occupied dwellings.

[3] 2 Total Household Income does not equal the sum of Primary Income & Social Transfers due to the effect of the Statistical  Discrepancy (-€496m in 2013 at State level).

[4] Household Incomes increased in Donegal but the increase in taxes meant that disposable household income fell between 2012 and 2014.

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About WDC Insights

WDC Insights is the blog of the Western Development Commission Policy Analysis Team. The WDC Policy Analysis team analyses regional and rural issues, suggests solutions to regional difficulties and provides a regional perspective on national policy objectives. Policy Analysis Team Members are: Deirdre Frost, Helen McHenry and Pauline White. We will all be posting here. You can contact us here, or use our firstnamelastname at wdc.ie Follow us on Twitter @WDCInsights
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