April 2005

IZA DP No. 1553: The Labour Market Characteristics and Labour Market Impacts of Immigrants in Ireland

published in: Economic and Social Review, 2006, 37 (1), 1-26

The purpose of this paper is two-fold. We firstly produce a labour market profile of non-Irish immigrants who arrived in Ireland in the ten years to 2003. We then go on to use the labour market profile in estimating the impact of immigration (non-Irish) on the Irish labour market. Immigrants are shown to be a highly educated group. However, they are not all employed in occupations that fully reflect their education levels. The model of the labour market that we use to simulate the impact of immigration differentiates between low-skilled and high-skilled labour. This allows us to estimate the impact of immigrants (a) if they were employed at a level fitting their education and (b) if they were employed in occupations below their educational level. Our results show that under scenario (a) immigrants who arrived between 1993 and 2003 increased GNP by between 3.5 and 3.7%, largely by lowering skilled wages by around 6% and increasing Ireland’s competitiveness. Under scenario (b), the increase in GNP is reduced to 3% because the impact on skilled wages is lower. If we assume the immigration is primarily unskilled, the impact on earnings inequality is reversed.