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Ireland's Recession and the Immigrant/Native Earnings Gap

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Listed:
  • Barrett, Alan

    (ESRI, Dublin)

  • Bergin, Adele

    (ESRI, Dublin)

  • Kelly, Elish

    (ESRI, Dublin)

  • McGuinness, Seamus

    (Economic and Social Research Institute, Dublin)

Abstract

The economic collapse was more severe in Ireland relative to elsewhere. Many questions have arisen concerning the impacts of the collapse, including the impacts on immigrants and their subsequent reactions. Previous research shows that immigrant employment contracted sharply over the recession, thereby suggesting reduced demand for immigrant labour. In this paper, we ask whether immigrants' earnings also fell, relative to natives. Although the raw data shows a widening of the immigrant/native pay gap, when we control for relevant characteristics the adjusted wage gap narrows. A decomposition analysis shows that most of the change in the raw wage gap is generated by the changing composition of the immigrants who were employed.

Suggested Citation

  • Barrett, Alan & Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2014. "Ireland's Recession and the Immigrant/Native Earnings Gap," IZA Discussion Papers 8459, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8459
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    References listed on IDEAS

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    1. Alan Barrett & Elish Kelly, 2012. "The Impact of Ireland’s Recession on the Labour Market Outcomes of its Immigrants [L’impact de la récession en Irlande sur le devenir de ses immigrés sur le marché du travail]," European Journal of Population, Springer;European Association for Population Studies, vol. 28(1), pages 91-111, February.
    2. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    3. Alan Barrett & Corona Joyce & Bertrand Maître, 2013. "Immigrants and welfare receipt in Ireland," International Journal of Manpower, Emerald Group Publishing Limited, vol. 34(2), pages 142-154, May.
    4. Alan Barrett & Adele Bergin & David Duffy, 2006. "The Labour Market Characteristics and Labour Market Impacts of Immigrants in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 37(1), pages 1-26.
    5. Barrett, Alan, 2009. "EU Enlargement and Ireland's Labour Market," IZA Discussion Papers 4260, Institute of Labor Economics (IZA).
    6. Alan Barrett & David Duffy, 2007. "Are Ireland's Immigrants Integrating into its Labour Market?," Papers WP199, Economic and Social Research Institute (ESRI).
    7. Javier Gardeazabal & Arantza Ugidos, 2004. "More on Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 1034-1036, November.
    8. Alan Barrett & Yvonne McCarthy, 2008. "Immigrants and welfare programmes: exploring the interactions between immigrant characteristics, immigrant welfare dependence, and welfare policy," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 24(3), pages 543-560, Autumn.
    9. Diarmaid Addison-Smyth & Kieran McQuinn, 2010. "Quantifying Revenue Windfalls from the Irish Housing Market," The Economic and Social Review, Economic and Social Studies, vol. 41(2), pages 201-233.
    10. Alan Barrett & Yvonne McCarthy, 2007. "Immigrants in a Booming Economy: Analysing Their Earnings and Welfare Dependence," LABOUR, CEIS, vol. 21(4‐5), pages 789-808, December.
    11. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-442, June.
    12. Suen, Wing, 1997. "Decomposing Wage Residuals: Unmeasured Skill or Statistical Artifact?," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages 555-566, July.
    13. Alan Barrett & Séamus McGuinness & Martin O'Brien, 2012. "The Immigrant Earnings Disadvantage across the Earnings and Skills Distributions: The Case of Immigrants from the EU's New Member States," British Journal of Industrial Relations, London School of Economics, vol. 50(3), pages 457-481, September.
    14. Ronald L. Oaxaca & Michael R. Ransom, 1999. "Identification in Detailed Wage Decompositions," The Review of Economics and Statistics, MIT Press, vol. 81(1), pages 154-157, February.
    15. Bergin, Adele & Kelly, Elish & McGuinness, Seamus, 2012. "Explaining Changes in Earnings and Labour Costs During the Recession," Papers EC9, Economic and Social Research Institute (ESRI).
    16. Myeong‐Su Yun, 2009. "Wage Differentials, Discrimination And Inequality: A Cautionary Note On The Juhn, Murphy And Pierce Decomposition Method," Scottish Journal of Political Economy, Scottish Economic Society, vol. 56(1), pages 114-122, February.
    17. Martin Kahanec & Klaus F. Zimmermann (ed.), 2010. "EU Labor Markets After Post-Enlargement Migration," Springer Books, Springer, number 978-3-642-02242-5, September.
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    Cited by:

    1. Elish Kelly & Seamus McGuinness & Philip J. O’Connell & Alberto González Pandiella & David Haugh, 2020. "How did Immigrants Fare in the Irish Labour Market over the Great Recession?," The Economic and Social Review, Economic and Social Studies, vol. 51(3), pages 357-380.
    2. Violaine Faubert, 2019. "Why Has Labour Market Participation Not Fully Recovered in Ireland since the Recession?," European Economy - Economic Briefs 051, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    3. Milena Nikolova, 2015. "Migrant well-being after leaving transition economies," IZA World of Labor, Institute of Labor Economics (IZA), pages 195-195, October.
    4. McGinnity, Frances & Grotti, Raffaele & Groarke, Sarah & Coughlan, Sarah, 2018. "Ethnicity and nationality in the Irish labour market," Research Series, Economic and Social Research Institute (ESRI), number BKMNEXT369, June.

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    More about this item

    Keywords

    recession; immigrant earnings; Ireland;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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