ESRI highlights challenges posed by migration

Analysis: The debate on job displacement - begun by the Irish Ferries debacle - has become a post-Christmas panto with all sorts of colourful characters, from Pat Rabbitte to Charlie McCreevy joining in the fun.

But watching from the sidelines, an intelligent frown on its brow, the ESRI has decided to produce a more adult analysis of the issue.

Its contribution - boringly entitled "The Labour Market Characteristics and Labour Market Impacts of Immigrants in Ireland" - is the second more grown-up analysis in what was becoming an overly emotive debate.

Both of them used freshly published data on migrant workers produced in the Central Statistics Office's (CSO) Quarterly National Household Survey. The first of these - from AIB economists John Begg and Oliver Mangan - finds little or no evidence of job displacement.

This latest analysis, which is written by ESRI economists Alan Barrett, Adele Bergin and David Duffy, doesn't disagree with that conclusion, but highlights some interesting challenges that migration will pose.

The paper first profiles foreign workers by age, gender and education and finds that there is little difference between foreign and Irish workers in terms of the share of males and females working here. But they are significantly younger.

Using their statistical wizardry, the authors arrive at two further interesting conclusions. Foreign workers are, by and large, quite a clever bunch but tend to be employed in jobs for which they are overqualified (they have lower occupational attainment, in economic jargon).

But what is the answer to the panto question? Is there job displacement? Is there a race to the bottom?

The answer is adult and boring. "They [ migrants] may also have had another beneficial impact; by reducing earnings of skilled workers and raising those of unskilled workers, the immigrant inflow acted to reduce income inequality".

So while they haven't pushed out any Irish workers out of a job, they have tended to moderate wage growth.

But there is a twist to the findings. Foreign workers have had a negative impact on wage levels not just at the lower end of the pay scale, but also in the middle-to-higher end of the scale. As a result, they have acted to reduce income inequality.

Finally, the authors argue that there are two lessons from their study.

Firstly, although foreign workers have been well skilled, this may not continue.

We need these high-skill workers, say the ESRI, and should act to keep them coming here.

Secondly, their high skills may lead them to get frustrated with the types of jobs in which they are now.