'Improved education levels' led to fall in unemployment

Better educational achievement has been a much bigger driver in cutting unemployment than demographics, a paper published by …

Better educational achievement has been a much bigger driver in cutting unemployment than demographics, a paper published by the Central Bank has found.

The paper, by Rob Hamilton of the Bank of England, concludes that up to a quarter of the decline in unemployment between 1994 and 2003 could reflect a rise in educational attainment.

Likewise, improved education levels could have been behind two-thirds of the rise in employment over the same period, according to the research.

Mr Hamilton, who spent time researching at the Central Bank last year, also believes that a shift in education levels has been responsible for an estimated annual 1.4 per cent improvement in estimated "labour quality".

The paper explains that labour quality depends on the characteristics of the job and the person, such as innate ability, training, responsibility and experience.

Together, labour quality and employment growth can account for almost half of annual economic growth per adult over the past decade, the paper says. This would leave "relatively little room for an economic miracle".

Unemployment fell from 15.6 per cent in 1994 to 6.2 per cent in 2003. It has since fallen closer to 4 per cent.

The relative youth of the Irish population is frequently cited as having provided a basis for much of the economic growth seen over the past decade.

When it comes to jobs, however, Mr Hamilton says demographics have had a "negligible effect" on unemployment.

Immigration has made only a small contribution to the overall trend, even though non-Irish-born migrants have tended to be more educated and more likely to be of working age than the domestic population, he says.

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Úna McCaffrey

Úna McCaffrey

Úna McCaffrey is Digital Features Editor at The Irish Times.