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

Irish economic development: From Poverty… MAY 1997

1988

..to Shining Light in a decade

MAY 1997

The Celtic Tiger

Europe’s shining light The Economist

1988 1997

Average Growth in GNP

10 8 % 6 4 2 0 19 80 -8 5 Performance spectacular in terms of historical experience 19 85 -9 0 19 90 -9 5 19 95 -0 0 20 00 -0 5 20 05 -1 0*

* Forecasts from ESRI “Medium Term Review 2005-2012”

Employment

Strong employment growth

% 3 2 1 7 6 5 4 0 -1 1987 1990 1993 1996 1999 2002 2005

Unemployment

Unemployment Rate Declining

20 15 10 5 0 1988 1991 1994 1997 2000 2003 2006

Inflation

6 5 4 % 3 2 1 0 1990

Until 2000, Inflation had remained low

1993 1996 1999 2002 2005

* Inflation measured as CPI inflation

Public Finances

Public Finances have moved into surplus

% -1 -2 -3 -4 2 1 0 5 4 3 1991 1994 1997 2000 2003 2006

• • • • • •

Summary of Economic Developments

1980s 1990s

Low growth High unemployment High Inflation Towering public debts Negative net migration Per capita income less EU average • 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)

80 60 40 20 0 -20 -40 -60 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005

Composition of Inflows (%)

60 50 40 30 20 10 0 1987 1989 UK 1991 EU 1993 1995 USA 1997 1999 Rest 2001 EU13 2003 2005 EU10

Age Distribution (%) of Native and Immigrant Adult Populations (QNHS Q2 2004)

Age Group Irish All Immigrants

15-19 20-24 10.4

9.8

8.1

13.1

25-34 16.1

37.4

35-44 45-54

55-59 60-64 65+ No.

17.5

24.2

17.2

8.8

7.5

5.9

3.1

1.9

15.6

3.4

60,893 2,540

Source:

Barrett and Bergin (2007)

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

60 50 40 30 20 10 0 Irish Male Immigrant Female

Labour Force Status Distribution of Native and Immigrant Labour Force Participants

Status Employed, FT Employed, PT Unemployed, Seeking FT Unemployed, Seeking PT Marginally Attached Irish

78.3

17.0

3.5

0.6

0.5

Immigrant

78.2

14.1

5.9

1.2

0.6

Sector of Employment Distribution (Selection of Sectors)

Sector

Agriculture Manufacturing Construction Wholesale & Retail Hotels & Rest.

Real Estate Irish

6.9

15.0

11.5

14.3

5.2

7.9

Immigrant

1.7

15.7

8.4

11.0

14.0

12.2

Educational Attainment: Labour Force Participants(%)

50 40 30 20 10 0 Irish Less than Leaving Cert Third Level Degree and Above Immigrant Leaving Cert and Non-Degree

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 qualification (37.9% versus 17.5%) level

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 2.8-3.0% • Employment rises by 2.1% • GNP per head rises by 0.4-0.5% • Wages fall by 3.7- 3.9% •

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