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Understanding Irish Labour Force Participation

Listed author(s):
  • Byrne, Stephen

    (Central Bank of Ireland)

  • O'Brien, Martin D.

    (Central Bank of Ireland)

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 infl uence 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 refl ects the in uence 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 in uence of the falling male trend. Higher immigration is the most effective way of offsetting the expected decline in trend participation out to 2025.

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File URL: https://centralbank.ie/docs/default-source/publications/research-technical-papers/research-technical-paper-01rt16.pdf?sfvrsn=8
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Paper provided by Central Bank of Ireland in its series Research Technical Papers with number 01/RT/16.

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Date of creation: Mar 2016
Handle: RePEc:cbi:wpaper:01/rt/16
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  1. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, January.
  2. Enrico Fabrizi, 2009. "The Determinants of Labour Market Transitions," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 68(2), pages 233-265, July.
  3. Benhabib, Jess & Rogerson, Richard & Wright, Randall, 1991. "Homework in Macroeconomics: Household Production and Aggregate Fluctuations," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1166-1187, December.
  4. Kudlyak, Marianna, 2013. "A Cohort Model of Labor Force Participation," Economic Quarterly, Federal Reserve Bank of Richmond, issue 1Q, pages 25-43.
  5. Stephanie Aaronson & Tomaz Cajner & Bruce Fallick & Felix Galbis-Reig & Christopher Smith & William Wascher, 2014. "Labor Force Participation: Recent Developments and Future Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 45(2 (Fall)), pages 197-275.
  6. Cristian Ionel Rotaru, 2014. "Transitioning Out of Unemployment: Analysis Using the ABS Longitudinal Labour Force Survey File," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 17(2), pages 111-137.
  7. Helen Russell & Philip J. O’Connell, 2004. "Women Returning to Employment, Education and Training in Ireland - An Analysis of Transitions," The Economic and Social Review, Economic and Social Studies, vol. 35(1), pages 1-25.
  8. Christopher J. Erceg & Andrew T. Levin, 2014. "Labor Force Participation and Monetary Policy in the Wake of the Great Recession," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 46(S2), pages 3-49, October.
  9. Balleer, Almut & Gómez-Salvador, Ramón & Turunen, Jarkko, 2009. "Labour force participation in the euro area: a cohort based analysis," Working Paper Series 1049, European Central Bank.
  10. Bruce C. Fallick & Jonathan F. Pingle, 2006. "A cohort-based model of labor force participation," Finance and Economics Discussion Series 2007-09, Board of Governors of the Federal Reserve System (U.S.).
  11. Adele Bergin & Elish Kelly & Seamus McGuinness, 2015. "Changes in labour market transitions in Ireland over the Great Recession: what role for policy?," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-18, December.
  12. Robert E. Hall, 2005. "Employment Fluctuations with Equilibrium Wage Stickiness," American Economic Review, American Economic Association, vol. 95(1), pages 50-65, March.
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