Human Capital, the Labour Market and Productivity Growth in Ireland. ESRI WP158. September 2004

Recent developments in growth theory1 suggest that factors such as human capital accumulation are central to the growth process of an economy through raising productivity and increasing a country’s ability to develop and facilitate technology. In these models policies that raise the level of human capital can permanently increase the growth rate. The Irish economy presents a highly interesting case-study of this hypothesis. Ireland2 is a small, highly-traded economy which witnessed dramatic growth rates in the 1990s with a doubling of output, a 40% increase in employment and a 60% fall in levels of unemployment. This remarkable performance led to rapid convergence in per capita output with the EU average