This paper explores developments in the labour force participation rate in Ireland. Given the important role of labour supply in explaining Irish economic growth, we aim to identify the relative influence of structural and cyclical factors in the recent dynamics of Irish labour force participation. Using a number of empirical approaches our results highlight the role of age, nationality and gender on the participation rate. We also find that the recent decline in female participation is entirely a response to the stage in the economic cycle given the weaker labour market, whereas the fall in male and overall participation also reflects the influence of some structural factors. Accordingly a rise in the participation rate is to be expected in the near term as the economic recovery continues, and current measures of slack in the economy should account for this. Combining our results and various population projection scenarios, we show that policy actions to increase female participation may not in and of themselves yield significant changes in the aggregate trend participation rate over the medium term owing to the stronger influence of the falling male trend. Higher immigration is the most effective way of offsetting the expected decline in trend participation out to 2025.

Working Papers

This paper estimates the potential loss in trade between Ireland and the United Kingdom arising from increases in non-tariff barriers following the UK’s exit from the European Union. Using a difference gravity specification,we estimate a 9.6 per cent decline in trade flows between the UK and Ireland from an increase in border waiting times. This equates to a 1.4 per cent decline in total Irish exports and a 3.1 per cent decline in total Irish imports.We also present evidence of heterogeneity in the exposure (measured by time-sensitivity) across different types of goods, with beverages,fresh foods and raw materials being most exposed. For trade in fuels, chemicals and imperishable foods we do not find evidence of an effect from an increase in time.

A version of this piece was also published on the website VoxEU

As well as a sharp rise in unemployment, the economic and financial crisis saw a significant increase in the number of people outside the labour force, i.e. individuals who are currently not classified as unemployed but are not in employment and are available for work. In this Letter we construct a new measure of labour utilisation – the Non-Employment Index (NEI) – that takes into account this potential additional labour supply. The index distinguishes between groups like short-term and long-term unemployed, discouraged workers and passive job seekers, factoring in how likely each group is to transition to employment. By including tailored weights that take into account persistent differences in each group’s likelihood of regaining employment, the NEI is arguably a more comprehensive measure of labour market conditions than the standard unemployment rate. Our estimates show that, as of the last quarter of 2016, the non-employment rate (including part-time underemployed workers) had declined to 9.4 per cent at the end of 2016 – significantly below its crisis peak but slightly higher than the standard unemployment rate. Our analysis suggests that there may be some scope for the unemployment rate to fall further before significant wage pressures emerge, but labour supply conditions are tightening as a strong recovery continues.

Since the beginning of the century there have been some notable structural shifts in the composition of Irish exports: services exports have become more prevalent;the export basket has become more concentrated; and the importance of trade in intermediate goods and services has risen. At the same time there is the continuing and relatively large role of foreign-owned and export-oriented multi-national enterprises in Ireland, and some evidence of changes in the dynamics of international trade globally in recent years. These shifts pose challenges for our understanding of how Irish export growth responds to changes in demand in our main trading partners, as well as the ultimate benefit of that export growth in terms of national income. Drawing on a number of relevant data sources, this Article explores these issues in more detail, highlighting the increasing complexity of analysing the prospects and benefits of external trade in the Irish case.