The Real Convergence of the Irish Economy and the Sectoral Distribution of Employment Growth

Abstract

In this chapter we present the basic facts of the recent Irish growth experience. The last decade has seen a substantial increase in income per head and in employment numbers, so that Ireland has converged rapidly on European and UK living standards. Furthermore, this progress was achieved with low inflation and without the sacrifice of fiscal or balance of payments stability. Productivity growth has been substantially higher than the European average since the late 1960s, due both to ‘catch-up’ by traditional sectors and to their replacement by more modern sectors; real convergence would have been experienced much earlier then had employment growth in Ireland proceeded at the same rate as elsewhere in Europe. This raises the question of whether, and under what conditions, catch-up could have been achieved by the traditional sectors without the amount of job-shedding actually experienced over the last few decades. Chapter 2 considers these issues. The present chapter is concerned with the less-speculative task of identifying the sectors in which recent employment growth occurred.

We are grateful to Fergal Shortall of the Economic and Social Research Institute for help with the data.