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Examining Unemployment Traps in the Republic of Ireland

Posted on July 29, 2014 by Micheál Collins

As individuals transition from unemployment to employment they experience losses of welfare payments and entitlements, gains in earned gross income and they begin to pay income taxes and social insurance contributions on their earned income.

To assess this impact it is possible to calculate a ‘participation tax rate’. It attempts to measure the collective impact of these experiences by estimating by how much changes to taxes and benefits reduce the financial gain of moving into work. A participation tax rate of 50% implies that half of the gains in earnings from commencing work are lost through changes to taxes and benefits.

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Posted in: IncomeJobsLiving wageTaxationWages

Hours and Earnings in the Northern Ireland Labour Market

Posted on July 29, 2014 by Paul Mac Flynn

As noted in this blog last week, there has been a significant recovery in the labour market for both Northern Ireland and the rest of the United Kingdom. However it was also noted that the pace of recovery in the labour market has not so far been reflected in economic growth. While UK economic growth is now reaching 3% per year, the economy has only just returned to its pre-crisis peak and it is nearly the last of the G7 economies to do so (Italy still lags behind). Furthermore most of the recent growth has been fueled by population increases as GDP per capita is still almost 5% below peak. In Northern Ireland the situation is arguably worse, as the quarterly Northern Ireland Composite Economic Index showed a contraction in the first quarter of 2014.

These contrasting trends lead to questions about the type of labour market recovery we are having. It is not enough to look at employment versus unemployment, we need to examine how employment may have changed. We need to examine how the profile of those in employment has changed, where they are employed and how they are employed. The expansion of low pay and insecure work practices could be key to understanding the productivity conundrum posed by contrasting economic statistics. The latest NERI Working Paper looks at these issues in depth and examines the policy challenges they present. The paper is here

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Posted in: Northern Ireland Wages

Productivity a danger for UK and NI

Posted on July 16, 2014 by Paul Mac Flynn

There were conflicting messages in the statistics released today on the Northern Ireland economy and labour market. On the labour market side, both measures of unemployment have fallen significantly for the three months from March to May of this year. The claimant count (literally a count of those receiving unemployment benefits) shows a consistent decrease over the last 18 months. However a claimant count is an imperfect measure of unemployment as it only includes those entitled to claim benefits and is unresponsive to changes in those entitlements. More importantly the Labour Force Survey measure of unemployment decreased as well.

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Posted in: JobsNorthern Ireland Wages

Latest data on youth unemployment

Posted on July 15, 2014 by Daragh McCarthy

As shown in the latest Quarterly Economic Facts , the youth unemployment rate in Ireland over the opening five months of the year was just over 25 per cent, down from a recent high of 30.4 per cent in 2012. While this represents a considerable improvement, the proportion of young people unemployed is still amongst the highest in the EU and there is data to suggest that many of these people have been looking for work for a long period of time—with 24,000 young people on the live register for one year or more.

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Posted in: Jobs

Uncertainty and Economic Recovery

Posted on July 14, 2014 by Micheál Collins

Slowly, the Irish economy is recovering; very slowly! Over the weekend, I and other economists contributed to a journal.ie article (see here) on the two-speed nature of the recovery. While the exchequers finances are improving (lower unemployment, higher employment, some increased spending, expenditure cuts and new taxes) the impact on the ground is very different. For those returning to work there have been significant, overdue and welcome benefits from recovery while for those already working the challenges of continuing to absorb further austerity has not dissipated.

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Posted in: Government SpendingInvestmentMacroeconomicsTaxation

Spending on health and the cost of providing universal care

Posted on July 05, 2014 by Daragh McCarthy

ProfilePicDMC

The recent release of OECD data on health care has highlighted the low level of expenditure on health in Ireland. As noted in the Irish Times, the state spent less on health than any other country in Western Europe during 2012. In this blog I attempt to put this stark fact into the context of spending on health  care in recent years and briefly highlight some of the costs associated with funding a single tier system through a complusory private insurance model.

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Posted in: Government Spending

The Living Wage points to broader understanding of low pay

Posted on July 04, 2014 by Micheál Collins

Living wage ROI 2

Yesterday’s launch of the Republic of Ireland Living Wage adds to a growing international set of similar figures. The number, which will be updated annually from here on, was calculated by the Living Wage Technical Group. It is €11.45 for 2014.

 There are a number of contexts for this figure: 

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Posted in: IncomeInequalityLabour costsLiving wageWages

Après Piketty

Posted on June 27, 2014 by Tom Healy

Tom Healy, Director NERI

In scenes slightly reminiscent of the papal visit to Ireland in 1979 the departure of what the media has styled ‘rockstar’ Thomas Piketty has left a curious void.  Was it a temporary mid-summer event to fete the fascinating and seductive ideas of a left-leaning French economist while regretting all the time ‘but that would never work here because ….’?  We belong to a world where tax is viewed as a ‘burden’ and we wonder why the French ‘tolerate’ such high taxes (and yet, ironically, wonder at their public infrastructure, health system and early childhood provision). 

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Posted in: Inequality

US-EU trade deal (TTIP): separating the baby from the bathwater

Posted on June 21, 2014 by Tom Healy

Tom Healy, Director NERI

Trade and investment across regions and continents can be good for people. It can raise levels of productivity, create jobs and encourage global cooperation to the betterment of all. Better to make trade than war especially when it comes to food, energy, medicines and the many goods and services that were undreamt of in previous generations. But not all trade and investment is good. History is marked by examples of huge exploitation of people and natural resources coupled with a denial of fundamental human rights and dignity. In recent decades, a growing trend towards de-regulation, harmonisation of regulatory policies and removal of tariff and non-tariff barriers to trade and investment must be viewed with considerable caution based on evidence, openness and democratic deliberation.

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Piketty on inequality

Posted on June 14, 2014 by Tom Healy

Tom Healy, Director NERI

''It is hard to imagine an economy and a society that can continue functioning indefinitely with such extreme divergence between social groups” – so writes Thomas Piketty on page 297 of ‘Capital the 21st Century’. The book is a serious read but not beyond the reach of most readers. It is very well written and accessible. I counted only a handful of mathematical equations in all throughout this 200,000 word book. Not bad for an economist whose book is becoming the ‘Book of the decade’. What Piketty has done is:

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Posted in: IncomeInequality

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