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Earnings Inequality, Institutions and the Macroeconomy – What Can We Learn from Ireland’s Boom Years?

Listed author(s):
  • Brian Nolan

    (School of Applied Social Sciences and Geary Institute, UCD)

  • Bertrand Maitre

    (School of Applied Social Sciences and Geary Institute, UCD)

  • Sarah Voitchovsky

    (School of Applied Social Sciences and Geary Institute, UCD)

Rapid economic growth is often expected to lead to increased returns to education and skills and thus to rising wage inequality. Ireland offers a valuable case study, with distinctive wage-setting institutions and exceptional rates of growth in output, employment and incomes in the Celtic Tiger period from 1994 to 2007. We find that dispersion in (hourly) wage inequality fell sharply to 2000, before increasing though much less sharply to 2007. Returns to both education and work experience declined considerable in the earlier period, while the increase in lower earnings relative to the median was associated with the introduction of the minimum wage in 2000, anchoring the bottom of the distribution. For 2000-2007 the faster increase in higher earnings may be associated with the changing pattern of immigration and of the employment growth in the second half of the boom, Further exploration of the factors at work towards the top of the distribution during these years is an important research priority.

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File URL: http://www.ucd.ie/geary/static/publications/workingpapers/gearywp201016.pdf
File Function: First version, 2010
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Paper provided by Geary Institute, University College Dublin in its series Working Papers with number 201016.

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Length: 45 pages
Date of creation: 15 Mar 2010
Handle: RePEc:ucd:wpaper:201016
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