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Economic Stress and the Great Recession in Ireland: Polarization, Individualization or ‘Middle Class Squeeze’?

Abstract

Following an unprecedented boom, since 2008 Ireland has experienced a severe economic and labour market crisis. Considerable debate persists as to where the heaviest burden of the recession has fallen. Conventional measures of relative income poverty and inequality have a limited capacity to capture the impact of the recession in terms of social exclusion. This is exacerbated by a dramatic increase in the scale of debt problems including significant negative equity issues. Our analysis provides no evidence for individualization or class polarization of risk. Instead, while economic stress level is highly stratified in class terms in both boom and bust periods, the changing impact of class is highly contingent on life course stage. An income based classification showed that the affluent income class saw its advantage relative to the income poor class decline at the earliest stage of the life-course and remain stable across the rest of the life course. At the other end of the hierarchy, the income poor class experienced a relative improvement in their situation in the earlier life-course phase and no significant change at the later stages. For the remaining income classes, life-course stage was even more important. At the earliest stage the precarious class experienced some improvement in its situation while the outcomes for the middle classes remain unchanged. In the mid-life course the precarious and lower middle classes experienced disproportionate increases in their stress levels while at the later stage it is the combined middle classes that lost out. Additional effects over time relating to social class are restricted to the deteriorating situation of the petit bourgeoisie at the middle stage of the life-course. The pattern is clearly a good deal more complex than that suggested by conventional notions of ‘middle class squeeze’ and points to the distinctive challenges relating to welfare and taxation policy faced by governments in the Great Recession.

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Fig. 1

Notes

  1. 1.

    Fixed poverty lines are a good deal more responsive to cyclical changes but have featured much less in European policy debates (Madden 2014).

  2. 2.

    Comparative analysis involving EU-SILC has tended to operate with measures of material deprivation that, in fact, encompass items that in terms of their manifest content appear to be more plausibly construed as indicators of subjective economic stress. For further discussion of these issues see (Whelan and Maître 2013).

  3. 3.

    Central Bank August 2013, Residential and mortgage Arrears Figures q2 2013.

  4. 4.

    Extracted 11/11/13.

  5. 5.

    For a detailed discussion of this notion see Kuz (2013).

  6. 6.

    The rotating nature of the SILC sample where individuals can be included in the sample for a maximum of four consecutive years together with substantial attrition problems in the Irish case mean that it is not possible to employ panel analysis to arrive at reliable conclusions relating to the impact of individual movement between classes.

  7. 7.

    In calculating standard errors we adjust for the clustering of individuals within households.

  8. 8.

    The household reference person is the person responsible for the accommodation. When the responsibility is shared the oldest person is chosen and in case of identical age, the HRP title is attributed to the male respondent.

  9. 9.

    In contrast to a simple additive measure which is uniform across years which would produce only 6 values for the stress variable the heterogeneous prevalence weighted procedures produces a continuous variable with 237 values.

  10. 10.

    The scale assigns the first adult in a household the value 1, each additional adult a value of 0.66 and each child a value of 0.33.

  11. 11.

    Factor analysis confirms that material deprivation and economic stress measures constitute two distinct dimensions.

  12. 12.

    Our analysis focuses on absolute rather than relative change. Further analysis allowing the impact of increases in material deprivation over time to vary across income class and social class provided no evidence of significant interactions that would suggest the need to employ a relative deprivation perspective rather than focusing on absolute change.

  13. 13.

    Peak to trough estimates involving comparisons of 2011 with 2008, which fail to capture significant increases between 2004 and 2008 show more substantial declines for all classes. However, the pattern of class differences in material deprivation and economic stress which are our primary focus remain broadly similar.

  14. 14.

    Our major focus is not the prediction of economic stress as such but further analysis shows that only 1.6 % of the predicted values are outside the range 0–1.

  15. 15.

    Income and social class jointly account for 16.1 % of the variance. 10 % is unique to income class and 1.5 % to social class with 4.6 % being shared between them. Thus 75.1 % of the social class effect is mediated by income class with 4.9 % being independent of the latter. Entering income class and social class separately produces patterns of coefficients comparable to those set out in Tables 2 and 3. For social class the largest positive coefficient is for the petit-bourgeoisie, followed by the intermediate & lower supervisory & technical & the lower services/sales/technical. The largest negative coefficient is for farmers with a more modest negative effect for the routine manual group and no significant effect for the never worked category. For income class the coefficients for the gross interactions of time period with the precarious and lower middle classes are almost identical to those observed when controlling for social class.

  16. 16.

    Non-significant interactions with age group are excluded.

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Acknowledgments

The authors would like to acknowledge the comments of two anonymous referees as well as from the participants at seminars at the Economic and Social Research Institute, Dublin, at the Social Protection Policy Workshop at the Geary Institute for Public Policy, University College Dublin, at Nuffield College Oxford and the 2014 annual conference of the European Consortium for Sociological Research. This journal article was derived from work done within the research programme for the Analysis and Measurement of Poverty and Social Exclusion funded by the Department of Social Protection under the Irish National Action Plan for Social Inclusion 2007–2016.

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Correspondence to Bertrand Maître.

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Whelan, C.T., Russell, H. & Maître, B. Economic Stress and the Great Recession in Ireland: Polarization, Individualization or ‘Middle Class Squeeze’?. Soc Indic Res 126, 503–526 (2016). https://doi.org/10.1007/s11205-015-0905-x

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Keywords

  • Great recession
  • Economic stress
  • Individualization
  • Polarization
  • Middle class squeeze