Education, Demographics and the Irish Economic Miracle

This paper considers how changes in the educational and age composition of the Irish population between 1994 and 2003 have affected employment, unemployment and the supply potential of the economy. The impact of demographic change on the labour market is estimated to have been relatively small. In contrast, up to a quarter of the decline in the unemployment rate, and two thirds of the increase in the employment rate, could reflect the rise in educational attainment. This rise is also largely responsible for estimated labour quality increasing by 1.4 per cent per year. Together, labour quality and employment growth can account for 2.1 percentage points of the 4.7 per cent average annual growth of GNP per adult over the past decade — leaving relatively little room for an economic miracle. 1