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 Presentation

Transcript of The Belated Irish Success

  • The Belated Irish Success

  • Introduction"Historiography" of the TigerThe Cartoon Version of Supply and DemandLogarithms and the Labour Market!

  • Possible Answers - 1WalshDemography, FDI etc., fiscal reformRuane, BarryFDIHarmon et al.EducationO'RourkeMechanism of convergence

  • Possible Answers - 2McAleese - 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:Openness & EUHuman capitalDemographyFDISecond order issues:Fiscal policy,fiscal reform, deregulationMonetary policyPartnerhip and policy consensusStructural FundsCandidates

  • OpennessFreeing of Trade - FDIAffects demand for labourSee effects in labour marketMigrationIncreases elasticity of labour supplyWider cultural effectsLearning from others' experience

  • Labour SupplyNatural IncreaseFemale ParticipationMigrationHuman CapitalReplacement Rate

  • Birth Rate

  • Total Fertility Rate by Education

  • Population Structure 2002

  • Female Labour Force Participation

  • Female Labour Force Participation

  • Female Labour Force Participation

  • Immigration

  • Education of Emigrants

  • Net Emigration

  • Population who have resided abroad

  • Educational Attainment, 30-39

  • Educational Attainment

  • Sectoral Human Capital

  • Unemployment Rate

  • Labour Supply

  • Replacement Rate

  • Skilled LabourEffects of increase in supply

  • Returns to Education - All Employees

  • Demand for LabourFDIShifting world demand for skilled labourCompetitiveness

  • US Manufacturing FDI Flows

  • Relative Wage Rates

  • Skilled LabourEffects of increase in supply and demand

  • w1w1L1Unskilled LabourD1L2w2S2w0L0D0S1Wage rateEmployment

  • Relative Wage Rates

  • Earnings Dispersion, Ireland 1987-2000

  • Enabling FactorsSound Public FinancesSpeed of adjustmentThe EU Structural FundsSocial Partnership

  • Fiscal policy Indexation 1974-2000

  • Fiscal Stance

  • CSF 1989-93 and 1994-1999

  • Ireland in the Medium TermPotential to Outperform Neighbours to 2010Supply Constraints still RelevantShort-term ProblemsVulnerabilities

  • GNP Forecasts

  • Average Growth of GNP

  • Relative GNP

  • DemographicsDependency ratioConvergence in output per headConvergence in output per worker

  • Economic Dependency

  • Investment as a Share of GNP

  • Participation Rates:Migration:Output:

  • 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

  • Unemployment Rate

  • Labour Supply:Population:

  • Shock the ModelObjective:To see how skilled and unskilled labour markets are affected by different factorsLower FDI, Lower GrowthLower Human CapitalEducational Attainment Frozen at 1980No migrationNo Migration

  • 1 : NH/POPH = 9.1+0.525*LOG(WH/PC)-.0049*TYEAR2 : NL/POPL = -.44+0.525*LOG(WL/PC)-.21*LOG(RUP/WL)-.012*UR3 : 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*TYEARElasticity of 0.525 - Doris, 1999Kearney, 1998Elasticity wrt US imposed as 1 (LR)

  • Lower FDI, Effect on GDP

  • Lower FDI, Effect on Wage Rates

  • Lower FDI, Effect on Immigration

  • Lower FDI, Effect on Unemployment

  • Educational Attainment

  • Unchanged Educational Attainment

  • Lower Human Capital - GDP

  • Lower Human Capital - Wage Rates

  • Lower Human Capital - Unemployment

  • Skilled Labour Supply %3.2 Skilled Wage Rates %-4.7 GNP %1.5 Total Employment %3.2 Unemployment rate %-0.7Effects of Net Immigration, 1996-99

  • Immigration Reduced by 10k

  • Immigration Reduced by 10k

  • Immigration Reduced by 10k

  • Immigration Reduced by 10k

  • Immigration Reduced by 10k

  • ConclusionsGrowth predciated on opennessHuman Capital contributed 1% a yearFDI ?Return from FDI and Human Capital enhance one another