Those aged under 45 have been affected “dramatically” more by the property crash and recession than those 45 and over, according to a new research paper published yesterday by the Economic and Social Research Institute, a Dublin-based think tank.
When comparing a range of indicators over the half-decade to 2009/2010, the report described the contrast between the fortunes of the two groups as “striking”.
Among the starkest contrasts between the under-45s and those over that age was how their weekly spending patterns changed.
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The younger age group on average spent 20 per cent less per week in 2009/2010 compared with five years earlier. Over the same period, those aged over 45 managed to keep most of their bubble-era gains, spending 31 per cent more each week than they did in 2004/2005.
The figures are adjusted to take account of the effects of inflation on spending power.
By all metrics analysed in the paper, including unemployment, mortgage arrears and negative equity, younger people have suffered far more than older groups.
The author of the paper, Prof Petra Gerlach-Kristen, described the impact of the crash on younger groups as “large, both by international standards and in a historical comparison”.
The Report – Chosen excerpts by Job Market Monitor
Figure 2 shows what fraction of households are affected by unemployment. We perform this analysis by household age and size and by whether the head or other household members are unemployed. The first two columns show the unemployment rate for single households by age group. Singles under the age of 45 had an unemployment rate of 14.2 per cent in 2009/10. The rate for older singles was less than half of that, namely 5.6 per cent. It is not surprising that younger individuals more often become unemployed, since they have less experience. Also, firms tend to lay off first those employees whom they hired last, who are typically younger than the average staff member.
In households with two grown-up members, unemployment is again more common for younger households (11.1 per cent for the household reference person, 19.2 per cent for the second grown-up, versus 5.4 per cent and 11.9 per cent for older households). For households with three grown-ups, the unemployment rate for the household reference person is again higher for the younger population group. However, the rate of unemployment of the second and third household member is higher in older households. Arguably, this reflects unemployed grown-up children staying or moving back in with their parents, and sibling in-laws sharing house to manage costs.