Mass emigration from the 1850s until World War I reduced Ireland's population to three-quarters of its 1851 level by 1911, but there have been few assessments of its economic impact. In Discussion Paper No. 854, George Boyer, Research Fellow Timothy Hatton and Kevin O'Rourke assess real wage growth by constructing series for agricultural and building labourers, carpenters and fitters. These reveal that both unskilled wage rates grew at 1.5% per annum while the skilled wage rates grew a little more slowly. Unskilled wages grew more rapidly than in Britain over the whole period and also converged on US levels until the 1890s. Time-series evidence reveals a negative relationship between the agricultural product wage and the male population, which suggests that emigration contributed to this real wage growth. County-level panel data reveal no inverse relationship between the growth of real wages and the labour force, however, which the authors attribute to the difficulties of identifying the labour demand curve at this disaggregate level.

The authors then evaluate the aggregate effects of emigration by estimating the real wage growth that would have taken place without emigration and the consequent reductions to population and labour force growth. Projections based on various demographic assumptions suggest that the Irish population in 1911 could have ranged from its 1851 level to half as large again. They then construct a computable general equilibrium, three-sector model of the economy in 1908, in which Ireland is a price taker in international markets in food and manufactured imports while its manufactured exports face a constant elasticity of substitution and services are not traded internationally. With perfect international capital mobility, they estimate that the real unskilled urban wage would have ranged from 66% to 81% of its actual 1908 level, depending on the scale of the labour force increase; with complete capital immobility, however, it would have ranged from 89% to 94% of its actual level. These results imply that emigration may have accounted for a substantial part of the real wage gain relative to Britain and all of the gain relative to the US.

The Impact of Emigration on Real Wages in Ireland 1850-1914
George R Boyer, Timothy J Hatton and Kevin O'Rourke

Discussion Paper No. 854, December 1993 (HR)