Comparative Analysis of Economies of Ireland and Northern Ireland

April 15, 2025

Macroeconomics
Labour Markets and Skills
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New research, published by the ESRI and commissioned as part of the Institute’s research programme with the Shared Island Unit, Department of the Taoiseach, provides a high-level comparison of the economies of Ireland and Northern Ireland (NI) in recent years. The report covers a broad range of dimensions including demographics and labour market trends, living standards, economic structures, education, health, and overall well-being. 

The research recognises that the economies North and South on the island are distinct in important structural respects. Northern Ireland is part of the wider UK economy, with significant implications for trade and public policy. Ireland, on the other hand, is a national-level economy and an EU Member State, so direct comparisons between the two will not always be on a like-for-like basis.  Nevertheless, the research provides a range of important insights on the relative performance of both economies over recent years.  The key findings, under the main research themes examined in the study, are as follows:

Demographics and Labour Market Trends

  • Ireland's population is growing faster than NI's, largely due to strong net migration in recent years. This has resulted in Ireland having a younger population, with a lower old-age dependency rate.
  • There have also been shifts in the labour market over time.  Labour market participation in Ireland has increased significantly since 2010, widening the gap with NI.  In 2022, the participation rate of those aged 16-64 was 76.8% in Ireland compared to 72.4% in NI. Employment rates in Ireland overtook NI in the period after the financial crisis, reflecting Ireland’s strong recovery.
  • However, due to the Irish economy’s highly open nature, Ireland's labour market is more volatile than NI’s, and experiences larger swings in unemployment, migration, and NEET (not in employment, education, or training) rates.

Living Standards and Income

  • The report finds widening gaps in all commonly used measures of living standards and these gaps favour Ireland. It focuses on reliable measures of living standards that are not distorted by globalisation effects, which is important for Ireland.
  • Household disposable income in Ireland is 18.3% higher than in NI (as of 2018), and the gap has widened over time.
  • Ireland’s GNI* per capita in 2022 was 57% higher than NI’s GDP per capita, reflecting stronger economic growth.
  • In terms of wages, the data show a positive gap favouring Ireland, with hourly earnings 36 per cent higher than in NI in 2022.

Economic Structure and Trade

  • While Great Britain (GB) remains NI’s largest trading partner, NI’s trade with GB has declined since 2015, while trade with Ireland has increased.
  • On a per capita basis, NI residents pay significantly lower personal income tax than those in Ireland (€2,980 in NI vs. €6,725 per capita in Ireland).
  • Corporate tax receipts per capita in Ireland (€5,760) are over five times those in NI (€1,018), reflecting the dominance of multinationals.
  • Ireland allocates a higher share of government expenditures to health (26.3% in Ireland vs. 17.3% in NI in 2022/23) and education (10.7% in Ireland vs. 9.5% in NI in 2022/23).

Sectoral and Productivity Differences

  • NI has a higher share of public sector employment (29.2% in NI vs. 25.3% in Ireland).
  • Employment in Ireland is more heavily concentrated in high-value added sectors like ICT and financial services (9.8% of jobs in Ireland vs. 5.4% in NI).
  • Manufacturing in Ireland accounts for 44% of gross value added, over 2.5 times NI’s share.
  • Labour productivity in NI lagged that of Ireland in most sectors. NI is more productive in ‘construction’ and ‘agriculture and ‘forestry and fishing’. Labour productivity in Ireland is more than 2.5 times NI’s, with the gap particularly influenced by the role of foreign-owned firms in Ireland.

Education, Healthcare, and Wellbeing

  • Across all age-groups in 2022, education enrolment rates are higher in Ireland than in Northern Ireland. For example, only 71% of 15–19 year olds in NI are in education vs. 94% in Ireland, a gap of over 20 percentage points.
  • Early school leaving rates have dropped in Ireland (from 5% to 2.7% between 2018 and 2022) but increased in NI (from 9.4% to 10% between 2018 and 2022). Overall, early school leaving rates are 3 times higher in NI than in Ireland.
  • Inpatient and outpatient waiting lists were similar for those waiting between zero and six months for treatment in 2024; however, the rates for longer durations are much higher in NI. 86 per 1,000 people in NI on waiting lists for 18+ months, compared to 12 per 1,000 in Ireland.
  • Life expectancy is an important indicator that tends to encapsulate the impacts of multiple well-being determinants across a range of areas including income levels, educational attainment and access to health services. In 2021, life expectancy for children aged below one in Ireland was 82.4 years compared to 80.4 years in NI, a gap of 2 years.  As was the case with many other key metrics, the gap between Ireland and NI in life expectancy has also been widening over recent years.

Adele Bergin, an author of the report and an Associate Research Professor at the ESRI, said: “Ireland has experienced stronger economic growth, higher wages, and higher living standards in recent years. The gap in economic performance and well-being indicators between Ireland and Northern Ireland is widening.”

Seamus McGuinness, an author of the report and a Research Professor at the ESRI, said: “The report provides a contemporary analysis of relative economic performance of both economies and allows for differences, in both the levels and evolution of key performance metrics, between Ireland and Northern Ireland to be better understood.”