Wednesday, September 22, 2010

Irish Net Emigration Soars

When asked why for example Ireland should have its own currency, while Florida shouldn't, some euro critics argue that this is because of greater labor mobility within the United States than in the euro area.

But as it happens, at least in the case of Ireland, labor mobility is very high. In 2006, during the height of the boom, net immigration was 71,800 or 1,7% of the population (more than 3 times the aggregate U.S. number), in line with the numbers seen in Florida and California.

Now that the Irish boom has turned into a bust, this net immigration has turned into a net emigration of 34,500 people, which is quite high for a country with less than 4.5 million people. Since 2006, gross immigration has fallen from 107,800 to 30,800 while gross emigration has increased from 36,000 to 65,300.

However, as I explained here, it is not certain that labor mobility will really help limit problems related to housing bubbles and the subsequent crashes, as it will further increase housing demand during the boom and reduce housing demand during the bust.