The dramatic change in economic conditions in Ireland over the last ten years provides an
opportunity to examine the impact of large macroeconomic shocks on inequality. We analyse wage
inequality in Ireland, from the height of an economic boom, through a very deep recession, to the start
of a recovery. In keeping with previous work we find that the dispersion in wages increased towards the
height of the boom, driven largely by rising returns to skill. However the economic crisis of 2008-2013
was accompanied by a significant reduction in wage dispersion. Although the improving characteristics
of the workforce increased wages for all workers over this period, this was offset by falling returns to
these skills. Only workers in the lowest decile were unaffected by declining returns, resulting in a
reduction in wage inequality during the recession. Our analysis highlights the important role played by
the National Minimum Wage in this process
