Migration in Ireland: Trends and Economic Impacts Yvonne McCarthy

Format of Presentation Background to migration story: Irish economic development Why migration trends in Ireland are interesting The trends; characteristics of immigrants in Ireland Labour market experience of immigrants in Ireland Labour market impacts of immigrants in Ireland

MAY Irish economic development: From Poverty…

The Celtic Tiger Europe’s shining light The Economist MAY to Shining Light in a decade

Average Growth in GNP * Forecasts from ESRI “Medium Term Review ”

Employment

Unemployment

Inflation * Inflation measured as CPI inflation

Public Finances

Summary of Economic Developments 1980s Low growth High unemployment High Inflation Towering public debts Negative net migration Per capita income less EU average 1990s High growth Robust Labour market Low inflation Healthy public finances Positive net migration (from 1996) One of the richest countries in EU

Why is Ireland’s migration story interesting? 1.Speed of inflow: Census 2002 = 7% Census 2006 = 10% 2.Ireland has a long history with migration 3.Immigrants in Ireland are highly educated

Net Migration (000s)

Composition of Inflows (%)

Age Distribution (%) of Native and Immigrant Adult Populations (QNHS Q2 2004) Age GroupIrishAll Immigrants No.60,8932,540 Source: Barrett and Bergin (2007)

Gender Distribution (%) of Native and Immigrant Populations (Q2 2004)

Labour Force Status Distribution of Native and Immigrant Labour Force Participants StatusIrishImmigrant Employed, FT Employed, PT Unemployed, Seeking FT Unemployed, Seeking PT Marginally Attached

Sector of Employment Distribution (Selection of Sectors) SectorIrishImmigrant Agriculture Manufacturing Construction Wholesale & Retail Hotels & Rest Real Estate

Educational Attainment: Labour Force Participants(%)

Summary of Immigrant Characteristics (Q2 2004) Most recent flows dominated by EU10 Young relative to native population: 22 – 44 year olds: 70% versus 43% Higher unemployment rate than Irish Significant proportion employed in “Hotels and Restaurants” Larger proportion of immigrants with 3 rd level qualification (37.9% versus 17.5%)

Immigrant Experiences in Labour Market: Earnings Barrett and McCarthy (2006) examine the earnings of immigrants relative to natives in Ireland Using data from a nationally represenative sample (EU-SILC) they find that immigrants earn 18% less than comparable natives The gap is more pronounced for immigrants from non-English speaking countries

Immigrant Experiences in Labour Market: Occupational Attainment Barrett, Bergin and Duffy (2006) examine the occupational attainment of immigrants relative to natives in Ireland They find what they call an “occupational gap” for non-UK and non-USA immigrants This means that immigrants are more likely to be in lower grade occupations than comparable natives

Immigrants Impacts on the Labour Market (1) Barrett et al (2006) examine the impact of immigrants on the Irish labour market Using a structural model of the Irish labour market, where high-skilled and low-skilled labour are assumed complements at the level of the economy Assess impact of a non-national inflow of 72,000 comprising 85% high-skilled and 15% low-skilled over a 10 year period Result: Skilled immigration has played a significant positive role in the economy

Immigrants Impacts on the Labour Market (contd.) Downward pressure on high-skilled wage (falls by 6% in long run) Results in increased output, employment and productivity; GNP about 3.5 – 3.7% higher; Employment 2.5 – 2.6% higher Demand for low-skilled labour increases Low-skilled wages rise by 1% or unemployment falls by 1.2% GNP per head 0.9 – 1.1% higher

Immigrants Impacts on the Labour Market (2) Authors run a second simulation accounting for occupational gap suffered by immigrants Increase in GNP now % Employment rises by 2.1% GNP per head rises by % Wages fall by % Result: Still positive

Summary and Conclusions Ireland’s exceptional economic growth in recent years has been accompanied by an influx of non- nationals On average immigrants in Ireland tend to be younger and more highly educated than the native population Despite this, immigrants tend to earn less than comparable natives and be employed in occupations that are not commensurate with their skill levels Over time immigrants might assilimiate in the market and these effects could disappear

Migration in Ireland: Trends and Economic Impacts Yvonne McCarthy