the belated irish success
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The Belated Irish Success. Introduction. "Historiography" of the Tiger The Cartoon Version of Supply and Demand Logarithms and the Labour Market!. Possible Answers - 1. Walsh Demography, FDI etc., fiscal reform Ruane, Barry FDI Harmon et al. Education O'Rourke - PowerPoint PPT PresentationTRANSCRIPT
Introduction
"Historiography" of the TigerThe Cartoon Version of Supply and DemandLogarithms and the Labour Market!
Possible Answers - 1
Walshƒ Demography, FDI etc., fiscal reform
Ruane, Barryƒ FDI
Harmon et al.ƒ Education
O'Rourkeƒ Mechanism of convergence
Possible Answers - 2
McAleese - Openness (EFC and CJH)Lane - Labour share fallingMurphy - It never happened!The Fairy Godmother (Godparent) viewGiavazzi et. al. EFC - see Bradley & WhelanHonohan & Walsh- The last wordBarry – FDI, FDI, FDI, FDI, …..
First order issues:ƒ Openness & EUƒ Human capitalƒ Demographyƒ FDI
Second order issues:ƒ Fiscal policy,fiscal reform, deregulationƒ Monetary policyƒ Partnerhip and policy consensusƒ Structural Funds
Candidates
Openness
Freeing of Trade - FDIƒ Affects demand for labourƒ See effects in labour market
Migrationƒ Increases elasticity of labour supplyƒ Wider cultural effects
Learning from others' experience
Population Structure 2002
0 50000 100000 150000 200000 250000 300000 350000
0-4
10-14
20-24
30-34
40-44
50-54
60-64
70-74
80-84
90-94
Age
Female Labour Force Participation
19881989
19901991
19921993
19941995
19961997
19981999
20002001
10
20
30
40
50
60
70
80
90
Primary
Inter
Leaving
Third
Source: Labour Force Survey micro data
Population aged 20 to 64
Female Labour Force Participation
0
10
20
30
40
50
60
70
80
90
20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
%
1988 2001
Female Labour Force Participation
0
10
20
30
40
50
60
70
80
90
15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64
%
Ireland, 2001 EU, 2000
Net Emigration
Cumulative Total for previous 15 years
-100
0
100
200
300
400
500
600
1945
1948
1951
1954
1957
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
Th
ousa
nd
s
Population who have resided abroad
Under 2525-29
30-3435-39
40-4445-49
50-5455-59
60-6465-69
70-7475+
5
10
15
20
25
30
35
40
Other Third Level
Source: CSO Census of Population
% of Population, 1996
Unemployment Rate
19881989
19901991
19921993
19941995
19961997
19981999
20002001
0
5
10
15
20
25
30
Pe
rce
nta
ge
PrimaryJunior
Leaving Third Total
Source: Labour Force Survey micro data
Population aged 20 to 64
Labour Supply
Avaerage annual Increase
-0.50
0.51
1.52
2.53
3.5
1990-95 1995-00 2000-05 2005-10 2010-15
percen
tag
e p
oin
ts
Natural Increase Female ParticipationMale Participation Migration
Earnings Dispersion, Ireland 1987-2000
hourly earnings 1987 1994 1997 2000
Top/bottom
decile
4.2 4.7 4.8 3.7
Enabling Factors
Sound Public FinancesSpeed of adjustment
The EU Structural Funds Social Partnership
GNP
-15
-10
-5
0
5
10
15
20
1974 1979 1984 1989 1994 1999
%
GDPE GNP
Fiscal policy Indexation 1974-2000
CSF 1989-93 and 1994-1999
Addition to level of GNP, percentage points
0
1
2
3
4
5
1990
1995
2000
2005
2010
1994-99
1989-93
Ireland in the Medium Term
• Potential to Outperform Neighbours to 2010• Supply Constraints still Relevant• Short-term – Problems• Vulnerabilities
GNP Forecasts
0
2
4
6
8
10
12
2000 2001 2002 2003 2004 2005 2006 2007
Nov-02 MTR Benchmark MTR Slowdown
Labour Demand:
Demand for skilled and unskilled labour:
- Little substitution between skilled and unskilled
Wage rates:
Skilled labour market, fixed UR:
Skilled wage rate flexible, changes to clear the market
Shock the Model
Objective:ƒ To see how skilled and unskilled labour markets
are affected by different factorsLower FDI, Lower GrowthLower Human Capital
ƒ Educational Attainment Frozen at 1980ƒ No migration
No Migration
1 : NH/POPH = 9.1+0.525*LOG(WH/PC)-.0049*TYEAR
2 : NL/POPL = -.44+0.525*LOG(WL/PC)-.21*LOG(RUP/WL)-.012*UR
3 : M = -432+289*(1-UR(-1)/100)/(1-UR_UK(-1)/100)+ 1362*W*(1-tax_IRL)/PC/(W_UK*(1-tax_UK)/PC_UK)- 20*D78+22*D90
4 : LOG(GNP) = -3.5-.018*LOG(W/W_UK)+.0016*TYEAR+ (1-.85)*LOG(GDP_USA)+.85*LOG(GNP(-1))
7 : LOG(L/GNP) = 17.8-.51*LOG(W/PC)-.0098*TYEAR
8 : LOG(LH/LL) = -113.5+.057*TYEAR
Elasticity of 0.525 - Doris, 1999
Kearney, 1998
Elasticity wrt US imposed as 1 (LR)
Skilled Labour Supply % 3.2 Skilled Wage Rates % -4.7 GNP % 1.5 Total Employment % 3.2 Unemployment rate % -0.7
Effects of Net Immigration, 1996-99