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

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  • 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)

Abstract

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.

Suggested Citation

  • Brian Nolan & Bertrand Maitre & Sarah Voitchovsky, 2010. "Earnings Inequality, Institutions and the Macroeconomy – What Can We Learn from Ireland’s Boom Years?," Working Papers 201016, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:201016
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    Cited by:

    1. Cathal O’Donoghue & Jason Loughrey & Karyn Morrissey, 2013. "Using the EU-SILC to model the impact of the economic crisis on inequality," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-26, December.
    2. Logue, Caitriona & Colgan, Brian & Callan, Tim, 2016. "Low Pay, Minimum Wages and Household Incomes: Evidence for Ireland," Papers BP2017/3, Economic and Social Research Institute (ESRI).
    3. Niamh Holton & Donal O'Neill, 2017. "The Changing Nature of Irish Wage Inequality from Boom to Bust," The Economic and Social Review, Economic and Social Studies, vol. 48(1), pages 1-26.
    4. Brian Nolan & Bertrand Maitre & Sarah Voitchovsky & Christopher Whelan, 2012. "GINI DP 70: Inequality and Poverty in Boom and Bust: Ireland as a Case Study," GINI Discussion Papers 70, AIAS, Amsterdam Institute for Advanced Labour Studies.
    5. E. Calvert & Brian Nolan & Tony Fahey & D. Healy & A. Mulcahy & B. Maître & Michelle Norris & I. O’Donnell & Nessa Winston & Christopher Whelan, 2013. "GINI Country Report: Growing Inequalities and their Impacts in Ireland," GINI Country Reports ireland, AIAS, Amsterdam Institute for Advanced Labour Studies.
    6. Cathal O’Donoghue & Jason Loughrey & Denisa M. Sologon, 2018. "Decomposing the Drivers of Changes in Inequality During the Great Recession in Ireland using the Fields Approach," The Economic and Social Review, Economic and Social Studies, vol. 49(2), pages 173-200.

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