IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/2493.html
   My bibliography  Save this paper

Earnings Inequality, Returns to Education and Immigration into Ireland

Author

Listed:
  • Nolan, Brian
  • Fitz Gerald, John
  • Barrett, Alan

Abstract

Increasing earnings inequality has been an important feature of the US and UK labour markets in recent years. The increase appears to be related to an increased demand for skilled labour and an increase in the returns to education. In this paper we examine what has happened to earnings inequality and the returns to education in Ireland between 1987 and 1997. We find that while both increased between 1987 and 1994, the increases slowed dramatically between 1994 and 1997. This is somewhat surprising as the exceptional growth in the Irish economy occurred from 1994 on. We look to immigration as being a contributing factor to this pattern because a large group of skilled workers flowed into the Irish labour market between 1994 and 1997. We develop a model of the Irish labour market and use it to simulate the impact of an increase in skilled labour. The simulation suggests that immigration did indeed reduce earnings inequality. This result is an interesting corollary to work from the US that shows the immigration of unskilled workers increasing earnings inequality.

Suggested Citation

  • Nolan, Brian & Fitz Gerald, John & Barrett, Alan, 2000. "Earnings Inequality, Returns to Education and Immigration into Ireland," CEPR Discussion Papers 2493, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:2493
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP2493
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. John Schmitt, 1993. "The Changing Structure of Male Earnings in Britain," CEP Discussion Papers dp0122, Centre for Economic Performance, LSE.
    2. Borjas, George J & Ramey, Valerie A, 1994. "Time-Series Evidence on the," American Economic Review, American Economic Association, vol. 84(2), pages 10-16, May.
    3. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    4. Alan Barrett & Philip J. O’Connell, 2001. "Is There a Wage Premium for Returning Irish Migrants?," The Economic and Social Review, Economic and Social Studies, vol. 32(1), pages 1-21.
    5. Ide Kearney, 1997. "Estimating the Demand for Skilled Labour, Unskilled Labour and Clerical Workers: A Dynamic Framework," Papers WP091, Economic and Social Research Institute (ESRI).
    6. Eli Bekman & John Bound & Stephen Machin, 1998. "Implications of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1245-1279.
    7. John Dinardo & Thomas Lemieux, 1997. "Diverging Male Wage Inequality in the United States and Ganada, 1981–1988: Do Institutions Explain the Difference?," ILR Review, Cornell University, ILR School, vol. 50(4), pages 629-651, July.
    8. Machin, Stephen, 1997. "The decline of labour market institutions and the rise in wage inequality in Britain," European Economic Review, Elsevier, vol. 41(3-5), pages 647-657, April.
    9. George J. Borjas & Richard B. Freeman & Lawrence F. Katz, 2021. "How Much Do Immigration and Trade Affect Labor Market Outcomes?," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 8, pages 163-234, World Scientific Publishing Co. Pte. Ltd..
    10. Gosling, Amanda & Machin, Stephen, 1995. "Trade Unions and the Dispersion of Earnings in British Establishments, 1980-90," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 57(2), pages 167-184, May.
    11. Gary Burtless, 1995. "International Trade and the Rise in Earnings Inequality," Journal of Economic Literature, American Economic Association, vol. 33(2), pages 800-816, June.
    12. Bradley, John & Fitzgerald, John, 1988. "Industrial output and factor input determination in an econometric model of a small open economy," European Economic Review, Elsevier, vol. 32(6), pages 1227-1241, July.
    13. George J. Borjas, 2021. "Self-Selection and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 4, pages 69-91, World Scientific Publishing Co. Pte. Ltd..
    14. Peter Gottschalk & Mary Joyce, 1998. "Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 489-502, November.
    15. Alan Barrett & Tim Callan & Brian Nolan, 1999. "Returns to education in the Irish youth labour market," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(2), pages 313-326.
    16. Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc.
    17. Stephen Machin & John Van Reenen, 1998. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1215-1244.
    18. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-1381, September.
    19. Derek Leslie & Yonghao Pu, 1996. "What Caused Rising Earnings Inequality in Britain? Evidence from Time Series, 1970–1993," British Journal of Industrial Relations, London School of Economics, vol. 34(1), pages 111-130, March.
    20. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, October.
    21. Alan Barrett & Tim Callan & Brian Nolan, 1999. "Rising Wage Inequality, Returns to Education and Labour Market Institutions: Evidence from Ireland," British Journal of Industrial Relations, London School of Economics, vol. 37(1), pages 77-100, March.
    22. Alois van Bastelaer & Georges Lemaître & Pascal Marianna, 1997. "The Definition of Part-Time Work for the Purpose of International Comparisons," OECD Labour Market and Social Policy Occasional Papers 22, OECD Publishing.
    23. 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.
    24. Blau, Francine D & Kahn, Lawrence M, 1996. "International Differences in Male Wage Inequality: Institutions versus Market Forces," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 791-836, August.
    25. George J. Borjas & Valerie A. Ramey, 1995. "Foreign Competition, Market Power, and Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 110(4), pages 1075-1110.
    26. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    27. Bradley, John & Fitz Gerald, John & Kearney, Ide, 1993. "Modelling supply in an open economy using a restricted cost function," Economic Modelling, Elsevier, vol. 10(1), pages 11-21, January.
    28. Nickell, Stephen & Bell, Brian, 1995. "The Collapse in Demand for the Unskilled and Unemployment across the OECD," Oxford Review of Economic Policy, Oxford University Press, vol. 11(1), pages 40-62, Spring.
    29. John M. Abowd & Richard B. Freeman, 1991. "Immigration, Trade, and the Labor Market," NBER Books, National Bureau of Economic Research, Inc, number abow91-1, October.
    30. Bound, John & Johnson, George, 1992. "Changes in the Structure of Wages in the 1980's: An Evaluation of Alternative Explanations," American Economic Review, American Economic Association, vol. 82(3), pages 371-392, June.
    31. Freeman, Richard B. & Katz, Lawrence F. (ed.), 1995. "Differences and Changes in Wage Structures," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226261607, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jeff Borland, 2000. "Economic Explanations of Earnings Distribution Trends in the International Literature and Application to New Zealand," Treasury Working Paper Series 00/16, New Zealand Treasury.
    2. Daron Acemoglu, 2002. "Technical Change, Inequality, and the Labor Market," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 7-72, March.
    3. Salverda, Wiemer & Checchi, Daniele, 2014. "Labour-Market Institutions and the Dispersion of Wage Earnings," IZA Discussion Papers 8220, Institute of Labor Economics (IZA).
    4. Angel de la Fuente & Antonio Ciccone, 2003. "Human capital in a global and knowledge-based economy," UFAE and IAE Working Papers 562.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    5. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    6. Daron Acemoglu, 2003. "Cross-Country Inequality Trends," Economic Journal, Royal Economic Society, vol. 113(485), pages 121-149, February.
    7. Peter Kuhn (McMaster), "undated". "Labour Market Polarization: Canada in International Perspective," Canadian International Labour Network Working Papers 02, McMaster University.
    8. Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.
    9. repec:eee:labchp:v:3:y:1999:i:pb:p:2215-2288 is not listed on IDEAS
    10. Alan Barrett & Tim Callan & Brian Nolan, 1997. "The Earnings Distribution and Returns to Education in Ireland, 1987-1994," Papers WP085, Economic and Social Research Institute (ESRI).
    11. Sarah Voitchovsky & Bertrand Maitre & Brian Nolan, 2012. "Wage Inequality in Ireland’s “Celtic Tiger” Boom," The Economic and Social Review, Economic and Social Studies, vol. 43(1), pages 99-133.
    12. Gandal, Neil & Hanson, Gordon H. & Slaughter, M.J.Matthew J., 2004. "Technology, trade, and adjustment to immigration in Israel," European Economic Review, Elsevier, vol. 48(2), pages 403-428, April.
    13. David H. Autor & Lawrence F. Katz & Melissa S. Kearney, 2005. "Trends in U. S. Wage Inequality: Re-Assessing the Revisionists," Harvard Institute of Economic Research Working Papers 2095, Harvard - Institute of Economic Research.
    14. Hollanders, Hugo & ter Weel, Bas, 2002. "Technology, knowledge spillovers and changes in employment structure: evidence from six OECD countries," Labour Economics, Elsevier, vol. 9(5), pages 579-599, November.
    15. Arnaud Dupuy & Lex Borghans, 2005. "Supply and demand, allocation and wage inequality: an international comparison," Applied Economics, Taylor & Francis Journals, vol. 37(9), pages 1073-1088.
    16. Thomas Moutos, 2006. "Technological Change, Inequality And Work Sharing," Scottish Journal of Political Economy, Scottish Economic Society, vol. 53(3), pages 305-318, July.
    17. Wolff, Edward N., 2002. "The impact of IT investment on income and wealth inequality in the postwar US economy," Information Economics and Policy, Elsevier, vol. 14(2), pages 233-251, June.
    18. Rosario Crinò, 2009. "Offshoring, Multinationals And Labour Market: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 23(2), pages 197-249, April.
    19. Wolff, Edward N., 2009. "Are computers driving real wages down?," Information Economics and Policy, Elsevier, vol. 21(3), pages 211-228, August.
    20. Fonseca, Tiago & Lima, Francisco & Pereira, Sonia C., 2018. "Job polarization, technological change and routinization: Evidence for Portugal," Labour Economics, Elsevier, vol. 51(C), pages 317-339.
    21. Sean E. Mulholland, 2019. "Stratification by regulation: Are bootleggers and Baptists biased?," Public Choice, Springer, vol. 180(1), pages 105-130, July.

    More about this item

    Keywords

    Earnings inequality; Returns to education; Immigration; Ireland;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:2493. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.