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When Unemployment Disappears: Ireland in the 1990s

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  • Brendan Walsh
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    Abstract

    This paper examines the behaviour of the Irish labour market during the 1990s. Over the course of the decade the Irish unemployment rate fell from the highest to the lowest in the EU. Over the same period a record number of jobs was created and all the indicators suggest that full employment was achieved. The primary reason for this “employment miracle” was the output boom, which in turn may be attributed to Ireland’s “super competitiveness” in the late 1990s. Several factors contributed to this – a low exchange rate, the inflow of FDI to high productivity sectors, and wage moderation following the return to centralised wage agreements in 1987. Labour market reforms, including a tightening of the social welfare regime and a switch of spending from income support to active labour market policies, played a positive role. The fact that unemployment has risen only slowly during the current downturn points to the lasting effect of these changes.

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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-02/cesifo_wp856.pdf
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    Bibliographic Info

    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 856.

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    Date of creation: 2003
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    Handle: RePEc:ces:ceswps:_856

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    1. Paul Gregg & Kirstine Hansen & Jonathan Wadsworth, 2000. "Poles Apart," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 1(2), pages 55-72, April.
    2. John Curtis & John FitzGerald, 1994. "Convergence in an Open Labour Market," Papers WP045, Economic and Social Research Institute (ESRI).
    3. Richard Layte & Tim Callan, 2001. "Unemployment, Welfare Benefits and the Financial Incentive to Work," The Economic and Social Review, Economic and Social Studies, vol. 32(2), pages 103-129.
    4. Stefan Szymanski, 2000. "The Political Economy of Sport," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 1(2), pages 101-109, April.
    5. Alan Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," Working Papers 769, Princeton University, Department of Economics, Industrial Relations Section..
    6. Patrick Honohan & Brendan Walsh, 2002. "Catching Up with the Leaders: The Irish Hare," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 33(1), pages 1-78.
    7. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
    8. Nolan, Brian & O'Neill, Donal & Williams, James, 2002. "The Impact of The Minimum Wage on Irish Firms," Research Series, Economic and Social Research Institute (ESRI), number PRS44.
    9. John P. Martin, 1998. "What Works Among Active Labour Market Policies: Evidence From OECD Countries' Experiences," OECD Labour Market and Social Policy Occasional Papers 35, OECD Publishing.
    10. Pietro Garibaldi & Paolo Mauro, 2002. "Anatomy of employment growth," Economic Policy, CEPR & CES & MSH, vol. 17(34), pages 67-114, 04.
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