The Changing Responsiveness of Labour Supply During the 1990s

The present study has two main aims. One is to obtain some more recent results for labour supply elasticities in Ireland than 1994 and the second is to compare results over time; this requires that econometric model specifications be consistent between years, as otherwise, any differences in estimated parameters would be difficult to interpret. Women and men are analysed separately in order to allow for the generally perceived differences in women’s and men’s labour supply behaviour. This is standard practice. The decision to separate those with very low education levels (no second level qualifications) from others was less standard and therefore requires some explanation. In Callan and Doris (1999), it was established that, for men in particular, there was a marked difference in behaviour between individuals according to their educational qualifications. This may be because the nature of non-participation is different for unqualified men than for those with some formal educational qualifications. Unqualified non-participants are significantly more likely to record themselves as being retired than more qualified men; 42 per cent of low education non-participants reported themselves to be retired in 1994 (58 per cent in 1998) compared to 30 per cent (36 per cent in 1998) of better educated non-participants. This may be because the difficulty that older, unqualified men face in retraining after a period of unemployment makes them more likely to leave the labour market. It may also be because low skill work tends to be more physical, and therefore more difficult to carry out as the individual ages. More qualified men are more likely to be in education than to retire – 23 per cent of non-participants in 1994 and 41 per cent in 1998 – whereas practically none of the lesser educated non-participants were in education.