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The Effect of Labour Subsidies in Northern Ireland, 1967-78: A Simulation Analysis


  • Roper, Stephen
  • O'Shea, Geraldine


The late 1960s and early 1970s was a period of intense government intervention in the U.K. economy. This paper considers the effect on Northern Ireland of those policies which acted (intentionally and unintentionally) as labour subsidies. The main measures considered are the Selective Employment Tax, the Regional Employment Premium and Temporary Employment Subsidy. An econometric model of Northern Ireland is used to simulate the effect of the subsidies over the 1967-79 period. The result suggests that labour subsidies had a significant positive effect on employment during their operation. However, this discouraged some potential migrants from the region, leading to a cumulative increase in local working age population, and a consequent perverse effect on local unemployment once the subsidies were curtailed after 1979. Copyright 1991 by Scottish Economic Society.

Suggested Citation

  • Roper, Stephen & O'Shea, Geraldine, 1991. "The Effect of Labour Subsidies in Northern Ireland, 1967-78: A Simulation Analysis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 38(3), pages 273-292, August.
  • Handle: RePEc:bla:scotjp:v:38:y:1991:i:3:p:273-92

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    Cited by:

    1. Harrigan, Frank & McGregor, Peter G & Swales, J K, 1996. "The System-Wide Impact on the Recipient Region of a Regional Labour Subsidy," Oxford Economic Papers, Oxford University Press, vol. 48(1), pages 105-133, January.
    2. Bernard Henri Nicot & Fiona Wishlade & Laurent Davezies & Douglas Yuill & Sandra Taylor & Rémy Prud' Homme, 1998. "Economic and social cohesion in the European Union: the impact of Member States' own policies," Post-Print hal-01138700, HAL.

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