Developments in the Irish Labour Market during the Crisis: What Lessons for Policy?

This paper provides a comprehensive description of the evolution of the Irish labour market over the past fifteen years, with a particular emphasis on the crisis-related adjustment and its consequences. The sectoral aspect of employment developments and in particular the role of the construction sector is a common theme of this paper. With the unemmployment rate tripling between 2008 and 2011, there have been clear implications for labour supply, as evidenced by the falloff in participation and the reversion to net outward migration. Micro data is used to calculate flows between labour market states, thereby providing insight into labour market dynamics. The issue of mismatch between labour demand and supply is highlighted as a key post-crisis challenge. A number of policy messages emerge from this analysis including the importance of a recovery in domestic demand for alleviating the unemployment problem.