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Profits and Wages in Ireland, 1987-1996

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  • Philip Lane

Abstract

A striking feature of the Irish economic resurgence since 1987 has been a major factor income shift away from labour towards capital. (The profit share has increased from 25.1 percent in 1987 to 34.8 percent in 1996.) In this paper, we examine the role of the national stratey of wage moderation in explaining this shift, consider its potential benefits and ask whether it is sustainable. We highlight the critical role of fiscal policy in minimising the trade-off between the returns to capital and labour. Finally, imminent membership of a European Monetary Union makes it all the more important not to overshoot the equilibrium rate of wage growth for the Irish economy.

Suggested Citation

  • Philip Lane, 1998. "Profits and Wages in Ireland, 1987-1996," Economics Technical Papers 9814, Trinity College Dublin, Department of Economics.
  • Handle: RePEc:tcd:tcduet:9814
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    File URL: http://www.tcd.ie/Economics/TEP/1998/9814.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. McGuinness, Seamus & Kelly, Elish & O'Connell, Philip J., 2008. "The Impact of Wage Bargaining Regime on Firm-Level Competitiveness and Wage Inequality: The Case of Ireland," Papers WP266, Economic and Social Research Institute (ESRI).
    2. Conall MacCoille & Daniel McCoy, 2002. "Economic Adjustment Within EMU - Ireland’s Experience," The Economic and Social Review, Economic and Social Studies, vol. 33(2), pages 179-193.
    3. Bengtsson, Erik & Waldenström, Daniel, 2015. "Capital Shares and Income inequality: Evidence from the Long Run," IZA Discussion Papers 9581, Institute for the Study of Labor (IZA).
    4. Donal O'Neill, 2000. "Evaluating Labour Market Interventions," Economics, Finance and Accounting Department Working Paper Series n990300, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
    5. International Monetary Fund, 2004. "Ireland; Selected Issues," IMF Staff Country Reports 04/349, International Monetary Fund.
    6. Erik Bengtsson & Daniel Waldenstršm, 2016. "Capital shares and income inequality: Evidence from the long run," Working Papers 0092, European Historical Economics Society (EHES).
    7. Bengtsson, Erik & Waldenström, Daniel, 2015. "Capital shares and income inequality: Evidence from the long run," CEPR Discussion Papers 11022, C.E.P.R. Discussion Papers.
    8. Simone Bertoli & Francesco Farina, 2007. "The functional distribution of income: a review of the theoretical literature and of the empirical evidence around its recent pattern in European countries," Department of Economic Policy, Finance and Development (DEPFID) University of Siena 005, Department of Economic Policy, Finance and Development (DEPFID), University of Siena.

    More about this item

    JEL classification:

    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

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