1. The Shape of the Irish Economy, to 2040 and beyond
PPAN Workshop
Ireland in 2040: Managing change over a generation
Ronan C. Lyons, Trinity College Dublin

2. Living standards in 1923 (1990 US$)
Ireland in the 20th century was not an economic outlier, rather a demographic one
Average AGR in living standards (20 OECD countries, )
Change in persons/km2
(20 OECD countries, )
3.5%
250%
R² = 80%
R² = 20%
3.0%
200%
2.5%
150%
2.0%
1.5%
100%
1.0%
50%
0.5%
0.0% 0%
$2,000 $4,000 $6,000
Living standards in 1923 (1990 US$)
Persons per km2, 1923 $0
$8,000 50
250
300
Source: Author calculations, based on Maddison, IMF WEO, Wikipedia, CIA World Factbook

3. With a swing towards population growth, Ireland’s outlier status is going to persist in the 21st century
Average decadal change in population:
15%
10% 5% 0%
-5%
-10%
Bulgaria
Greece
Romania
Portugal
Poland
Netherlands
Italy
Finland
Hungary
Germany
Denmark
Spain
Norway
Belgium
Austria UK
Sweden
France
Ireland
Source: Author calculations, based on Maddison (2013), Eurostat Population Projections (2013)

4. With a swing towards population growth, Ireland’s outlier status is going to persist in the 21st century
Average decadal change in population: forecast
15%
10% 5% 0%
-5%
-10%
Bulgaria
Greece
Romania
Portugal
Poland
Netherlands
Italy
Finland
Hungary
Germany
Denmark
Spain
Norway
Belgium
Austria UK
Sweden
France
Ireland
Source: Author calculations, based on Maddison (2013), Eurostat Population Projections (2013)

5. With a swing towards population growth, Ireland’s outlier status is going to persist in the 21st century
Average decadal change in population: vs
15%
10% 5% 0%
-5%
-10%
-15%
-20%
Bulgaria
Greece
Romania
Portugal
Poland
Netherlands
Italy
Finland
Hungary
Germany
Denmark
Spain
Norway
Belgium
Austria UK
Sweden
France
Ireland
Source: Author calculations, based on Maddison (2013), Eurostat Population Projections (2013)

6. Ireland’s demographic outlier status is also evident in urbanization rates and in average household size
Urbanization rates, by country
Average household size, by country (2014)
100 90 80 70 60 50 40 30 20 10
2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2
1.0
change
1960 urbanization
Ireland
Italy Germany Greece France Spain OECD
Norway Canada
USA UK
Finland Denmark Australia Luxembourg Netherlands
Iceland Japan Belgium
Portugal
Portugal Greece Spain Italy
Luxembourg
Belgium UK
Switzerland
France Netherlands
Austria Sweden Norway Denmark Germany Finland
Ireland
Average
Source: Author calculations, based on Hypostat (2016), UN WUP (2014)

7. Ireland’s under-urbanization is a housing market problem, not a labour market one
Lorenz curves of place of residence and work, Ireland (2016)
100%
Top 650 EDs account for:
65% of residents
83% of work/school
80%
60%
Equality Residence Work/School
40%
20% 0% 0%
20%
40%
60%
80%
100%
Source: Author calculations, based on CSO POWSCAR dataset (2016); excludes WFH/no fixed place of work; includes EDs with fewer than 10 returns

8. Little evidence that Dublin’s population share is too big – smaller populations mean bigger share in largest city
Share of population in largest city, European countries (n=42)
100%
R² = 60%
80%
Ireland (Rep)
60%
Ireland (Island)
40%
20% 0% 13
13 = 0.4m 16
Population in logs 19
19 =178m 12 14 15 17 18 20
Source: Author calculations, based on jakubmarian.com, Wikipedia/CIA World Factbook

9. Over the last two decades, our housing output has been increasingly out of sync with our household structure
Number of households (000s), by size and Census year
New dwellings completed in Ireland, (thousands)
1,800
1,600
1,400
1,200
1,000
800
600
400
200 75
741
125
228
120
505
215
237 53
499
886
Urban/GDA apts
Rural apts Other rural
Urban/GDA houses
Rural one-offs
1996
2016
1-2 persons
3-5 persons
6+ persons
Source: Author calculations, based on CSO Census and Dept of Environment/Housing statistics

10. As suggested by its under-urbanization, Ireland is “missing” roughly 0
As suggested by its under-urbanization, Ireland is “missing” roughly 0.5m apartments
Fraction of dwellings in apartments
Households by number of persons and related dwelling stock, 2016
Latvia Estonia
Italy Spain Switzerland Lithuania Iceland Finland Poland Germany Austria Slovakia Czech Rep Bulgaria Sweden UK
Greece France Liechtenstein
Portugal
Luxembourg
Romania Hungary Denmark Croatia Slovenia Cyprus Norway Belgium Netherlands
Malta Ireland
600,000
1-2 households
1-2 dwellings
500,000
3-5 households
3-5 dwellings
400,000
300,000
200,000
100,000 0%
20%
40%
60%
80%
GDA Ex-GDA
Source: Author calculations, based on Eurostat and CSO Census 2016

11. The 550,000 new homes planned in Ireland 2040 will not be enough to lower household size in coming decades
Average household size in Ireland, by Census year
Number of extra dwellings required (000s) for a population of 5.8m vs. 4.8m, for different average household sizes (relative to 2.75)
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
1200
1000
Ireland
2040
800
600
400
200
1966
1971
1981
1991
2002
2011
2016
2040e
EU2014
2.75
2.65
2.55
2.45
2.35
2.25
Source: Author calculations, including those based on Census of Ireland (various returns) and allowing for annual obsolescence of 0.5%

12. Policy needs to recognise trade-offs: second tier cities, not third, and apartments, not houses
Ireland 2040 recognises the role for Ireland’s ‘second tier’ cities
By the 2060s, Ireland’s five largest cities are likely to have a population of 5 million
Policy is unlikely to have much impact ‘redirecting’ growth from Dublin to second tier – but can prioritize those four cities relative to the ‘third tier’
Far more important than ‘Dublin vs. rest’ this is the prioritization of urbanization (of residence – urbanization of work is far ahead of this)
As population grows, Dublin’s share is likely to fall, based on patterns seen in other countries
Key to accommodating population growth efficiently will be the construction of apartments, to reflect demographics
Two alarming stats: Dublin (inside the M50) needs 20 extra homes per acre by mid- century – translating into an apartment block every week for decades
Solutions: audit of construction costs and regulations, cost-rental (budget), LVT

13. Thank you!
Key themes:
Ireland's long-term economic performance is very much in line with its
peers – but it remains a demographic outlier
Unusually among high-income countries, Ireland faces faster population growth in 21C than in 19C/20C
Taking account of Ireland’s size (and island nature), Dublin is not too big
Ireland's “under-urbanization” reflects housing market problems, not labour market ones
Its high household size also reflects housing market problems - in particular not building enough apartments
This is supply, not demand – and thus one of the principal challenges for Ireland 2040
is to reform policy and taxation in order to provide the “missing” 500,000 apartments