For better or for worse, but how about a recession?

Pretty much everyone is feeling the pain of the recession, unless you specialize in bankruptcy I suppose. How could it get worse? Well if you marriage ended due to the recession that would be a real bummer. So whats the story Rory? Well it looks like years 6-10 of your marriage is when you need to watch out, after the first flush of marital bliss and before she's just resigned to you.

For Better or for Worse, But How About a Recession?
J Arkes, Y-C Shen
In light of the current economic crisis, we estimate hazard models of divorce to determine how state and national unemployment rates affect the likelihood of divorce. With 89,340 observations over the 1978-2006 period for 7633 couples from the 1979 NLSY, we find mixed evidence on whether increases in the unemployment rate lead to overall increases in the likelihood of divorce, which would suggest countercyclical divorce probabilities. However, further analysis reveals that the weak evidence is due to the weak economy increasing the risk of divorce only for couples in years 6 to 10 of marriage. For couples in years 1 to 5 and couples married longer than 10 years, there is no evidence of a pattern between the strength of the economy and divorce probabilities. The estimates are generally stronger in magnitude when using national instead of state unemployment rates.

Losers from the Recession

I have been coming back to this topic more or less since this recession started. There are very few in Ireland who have not now been sizeably affected in terms of economic welfare by the recession.

(i) People between the age of 25 and 40 who purchased at the top of the market and are now struggling to make mortgage repayments. Those outside of the country should realise that Ireland has extremely punitive bankruptcy regulations. "Jingle mail" is rare in Ireland partly for cultural reasons and partly for legal reasons. The upshot is that an increasing number of predominately younger families are living in houses they can no longer afford, with almost 40,000 mortgages now in 90 day plus arrears. Morgan Kelly raised the possibility of a wave of defaults further destabilising the banking system. The basic human cost is also worth considering. A group of Irish economists proposed a debt forgiveness arrangement last week and a government advisory group proposed a part-freezing scheme, whereby mortgage-holders in distress could put up to a third of their mortgage "on ice". I honestly can't see these helping people who were given 100 per cent mortgages on the basis of two-incomes and are now trying to service those mortgages with only one income and the other coming under pressure. While many have pointed out that older people have not borne much cost from this recession, one channel where they might be taking a big hit is through their children with a lot of anecdotal evidence of parental bailouts of children's mortgage payments. The policy needs to be given to someone with a proper mandate to deal with it, including the development of a wide range of policies including some element of freezing, but also more active sale-and-lease-backs and reform of bankruptcy laws. Leaving people in limbo is not a humane strategy and it is getting to the stage where those who can't as opposed to wont pay may simply need, hard as it will be for them, to call the authority's bluff.

(ii) We have blogged continuously on unemployment. It is unfortunate that the ongoing emergency nature of the financial situation is placing this issue on such a back-foot. We are spending a large amount of money on welfare payments and also on the state training agency. As of yet, despite the announcement of a replacement of this agency, there has been no real coordinated effort to utilise the various government agencies to provide a buffer to the problem of unemployment. Our live register figures are nudging 450,000. While ultimately, the best solution to unemployment is a solution to the financial position, there absolutely needs to be urgent focus on the short-term labour market situation in Ireland. In particular, young people are not getting sufficient opportunity to signal their productivity to the wider labour market. The youth labour market problem is both potentially the most costly in the long-run for the country and the most fixable. We are dealing with a cohort of people with very low debt and earnings expectations who, for the most part, will be happy to work for low wages provided they are well-position when the Irish and global economy settles down. For older workers, cheap and cheerful internship-type solutions may be less feasible. There are certainly a cohort of older workers in sectors such as construction for whom it may not be possible to attain long-run employment again. Given that many construction workers begin work far earlier in life, it is worth strongly considering the extent to which it would be possible to allow those who wished to, to simply retire and take the state pension rather than going through a farcical process of retraining reluctant workers who have spent 40 years or more in a given sector into careers they have neither interest nor aptitude in. For workers who are still desperately seeking employment within construction, it is worth strongly considering redeploying capital spending programmes such as Metro North toward labour-intensive repairs and other shovel-ready spending.

(iii) The effect of the growing levels of unemployment on the expectations of children and teenagers coming through is something that is worth considering. Unemployment and economic insolvency are intergenerational phenomena but it would be nice to think that the younger teenagers of today who will likely see better times by the time they reach the labour market do not set their sites too low just because we are going through a period of economic turbulence and likely ensuing stagnation. Current conditions in Ireland have never been a very guide to ensuing conditions and it would be a shame to see people diminish the sense of enthusiasm that is required to get out there.

(iv) Regardless of the severity of the economic conditions, it should be remembered that being lonely or suffering chronic illnesses that involve physical pain are still two of the main negative impacts on well-being along with persistent mental problems. I won't try to put numbers on this during this post but it is worth remembering that countless studies show that the fixed component of well-being and the component related to defined states such as disability and chronic illnesses far outweigh the component explained by fluctuations in economic conditions.

In general, a well-being approach to the recession would focus less on income fluctuations in the middle and top brackets and far more on the components that actually influence well-being, namely ensuring that people are not trapped in an untenable debt position and are not trapped in unemployment. It is unconscionable to leave people in a situation where they simply cannot pay their mortgage yet are receiving letter after letter demanding payment, just as it is completely wrong to make no attempt to mobilise the still vast capabilities of the state to give young people a chance to develop a labour market track. Unfortunately a lot of commentators think of this stuff as fiddling while Rome burns but this is simply a wrong view. A team of people in government will work out a deal with the EU/IMF group and the upshot will be that we will finally have full numbers on the extent to which we have fallen as a country and hopefully things then people will become convinced that we are actually looking at the bottom rather than a fudge. Things will then progress at a much more subdued overall level and trajectory of income than reigned for the Tiger years but we will still be a relatively high-income country by any standards with no excuses for not getting to grips with these issues.

Links: 23rd July. Special Focus: Emigration.

1. Adam Jaffe: Building Program Evaluation Into The Design Of Public Research Support Programs

2. NSF Survey of Federal Funds for Research and Development

3. Greg Mankiw discusses the U.S. Council of Economic Advisers' "impossible job": measuring how many jobs were created by the American Recovery and Reinvestment Act of 2009. Here's a link to the CEA document.

4. Marginal Revolution flags a recent paper by Weber and Castillo from Yahoo! Research: The Demographics of Web Search. "How does the web search behavior of 'rich' and 'poor' people differ? Do men and women tend to click on different results for the same query?"

5. David McWilliams on emigration out of Ireland: "The ESRI predicts that 120,000 will leave the country in the next 18 months, on top of the 100,000 who have already gone in the past 18 months."

6. It was last year that the CSO reported that for the first time since 1995 more people left Ireland than moved here. That is, there was net outward migration.

7. Overall, the ESRI commentary warns that 200,000 people may be forced to emigrate between now and 2015 if unemployment does not abate.

8. In addition, a new Eurobarometer survey shows more than one fifth of Irish people are thinking of moving abroad for work. It also shows that 35% of Irish people feel employment prospects are better in other countries.

9. This Irish Times article states that current statistics show "Irish people are moving to both Canada and Australia in increasing numbers to escape the economic recession but are largely shunning traditional emigration routes to Britain and the US."

10. A companion article by the same journalist (Jamie Smyth) considers whether time abroad could end up as permanent emigration: "...if the Irish economy does not rebound in the next few years and create job opportunities for the next generation of graduates and school-leavers it seems very likely that a year spent working abroad will lead to longer term and more permanent emigration." To quote an old Pogues song, (hundreds of) thousands are "sailing".

The Psychological Effects of Recession - Human Sciences Talk

Linked here is a talk I gave to the UCD Human Sciences symposium that took place in Newman House on Tuesday. Below is a summary of this. All of this is preliminary but, given that we are dealing with a real-time situation, I feel some degree of responsibility to present findings for discussion even if it may be  some more time before the results are "camera-ready".

(i) The talk begins with an overview of the extent of the Irish recession. Ireland has witnessed a fall off in GNP that is the largest in the last 100 years. Retail sales are one third less than peak. Unemployment rates spiraled and are now stabilising at over 13 per cent, with far higher rates particularly among young men.

(ii) The second part of the talk addresses how recent research and developments in behavioural economics differs from traditional understanding of recession. In particular, loss aversion and endowment effects imply asymmetric effects of economic fluctuations with psychological effects being steeper on the downside. Myopia implies that downturns may have greater psychological effects than would be estimated from models where individuals smoothly discount the future. Recent work on emotion and identity further highlights the extent to which the state of unemployment may be particularly aversive. Furthermore, there has been an increasing emphasis in economics in measuring well-being directly on the basis that consumption itself is incomplete as a marker of welfare, particularly in economically wealthy countries.

(iii) The third part of the talk examines evidence from the "Celtic Tiger" period in Ireland. Following an increase in well-being that occurred in the late 1980s and early 1990s largely due to a decline in unemployment and increased job security, psychological well-being levels remained mostly static during the Irish economic boom. Furthermore, the effect of income on well-being is small once one climbs above the bottom 15 per cent of the income distribution. This is robust to a wide range of models. The effect of unemployment is still enormous through the Celtic Tiger period, being a great impact on well-being than either divorce or the presence of a chronic illness. To date, no variable I have ever looked at can explain this effect. I worried somewhat before that the results on Ireland are out of line with the Stephenson/Wolfers work but if you look closely at their paper, you can see that Ireland is one of the few countries that provides poor evidence for their central point when looked at from the point of view of the time series (see Figure 16).

(iv) The fourth part of the talk examines the well-being of a sample of approximately 1,300 students that we tracked from 2009-2010. Approximately 300 of these had graduated, and approximately 80 of these are unemployed. These results are preliminary but the effect of unemployment on life satisfaction is once again enormous and completely robust to a wide range of contemporaneous and lagged controls including personality measures, parental income and several others.

(v) The fifth part of the talk presents preliminary findings from our IRCHSS-funded project on well-being. Once again, unemployment has a massive effect on well-being, dominating all other effects including home-value and income reductions by a large margin. A big limitation of our data so far is a sample size of approximately 500 which reduces our ability to look at interactions and a restriction to households with internet access, which raises representativeness concerns. But the effects are substantial and in the direction expected. We are working further now on examining the interaction of home value reductions and unemployment in determining well-being. Furthermore we are examining the extent to which people with different types of values and identities are differentially affected by economic changes. A further point that is interesting is that the effect of  income reductions on life satisfaction, while not in the ballpark of unemployment changes, look qualitatively higher than previous work in Ireland. Again, this results is on probation but I have a strong sense that concerns such as procedural unfairness, anger about bank bailouts and so on may be magnifying the well-being effect of income losses in Ireland. Furthermore, we need to experiment with the ordering of these questions. I worry that asking people about income reductions may prime them to give lower life satisfaction scores than they would otherwise give. We have not controlled for this so far in our research.

(vi) The sixth part of the talk examines the evolution of the suicide rate in Ireland. Ireland's suicide rate increased enormously during the economic boom, partly in keeping with a long-run increase in the suicide rate. It stabilised post 2002 and, while suicide researchers urge caution in interpreting recent suicide data due to potential for changes in death reports and so on, it looks likely that the suicide rate in Ireland began to decline post 2004. This decline continued in 2008 the first year of our recession in Ireland. Vital statistics provided by the CSO indicate increases in the number of suicides in 2009 relative to 2008. For example there were 111 suicides reported in the third quarter of 2008 as opposed to 126 in the third quarter of 2009. This is worth treating seriously and certainly merits investigation as to the composition and potential motivations for suicides in 2009. However, the idea of a stable relationship between macroeconomic fluctuations and suicides in Ireland looks fanciful with some of the highest suicide rates in the history of the country having taken place at times of high economic growth. Furthermore, as said above, most suicide researchers in Ireland caution against the use of the raw figure in the year of publication as they are subject to revision.

(vii) The final part of the talk argues that far greater emphasis be placed on the development of unemployment policies in Ireland. Furthermore, it must be widely acknowledged that our current policies are failing badly. The viewpoint that unemployment results from a preference for leisure looks at best a tautology from the viewpoint of the well-being data, and at worst a dangerously prejudiced misconception. Ongoing research here is gathering further data to examine the effect of unemployment and home value reductions at the micro level on well-being. We are also comparing the effects of recession when looked at from traditional life satisfaction and well-being measures to when we examine more "microscopic" measures such as the day reconstruction method. The effect of unemployment stress on job search and financial decision making is also being examined.

Stephen Lea

Professor Stephen Lea, head of the School of Psychology at Exeter, will speak at Geary on April 6th at 1pm. The title of his talk is "Materialism, Money and Myopia: The psychology of recession and recovery". Some details of Professor Lea's work are available here Details of his publications on economics and psychology stretching back to the early 1970s are available here

Some Blog Links

1. A new report from the European Centre for the Development of Vocational Training: "The skill matching challenge: Analysing skill mismatch and policy implications". HT: Michael Egan. [The report is largely based on the contributions of Nigel O’Leary and Peter Sloane (Welmerc, School of Business and Economics, Swansea University), Seamus McGuinness and Philip O’Connell (ESRI – Economic and Social Research Institute, Dublin) and Kostas Mavromaras (NILS – National Institute of Labour Studies, Flinders University, Adelaide, Australia).]

"With global competition increasing, demographic change unfolding and rapid technological change intensifying, skill mismatch has come to the forefront of Europe’s policy debate (European Commission, 2008). Skill mismatch refers not only to skill shortages or gaps, but also to qualifications, knowledge and skills exceeding job requirements."

2. The U-S unemployment rate fell from 10 to 9.7 percent in January, but a Gallup poll out yesterday found that nearly one out of every five members of the country's workforce is underemployed. That's about 30 million Americans who are without jobs or unable to find full-time work.

3. NYT: "Economists fear that the nascent recovery will leave more people behind than in past recessions. Roughly 2.7 million jobless Americans will lose their unemployment check before the end of April... unless Congress approves the Obama administration’s proposal to extend the payments"

4. The Economist: God help the jobless

5. How business meetings are done at Google

6. Another Web 2.0 data-based (ad)-venture: Trendrr

The Effects of Graduating During a Recession

The Columbia Economics website has an interesting research section on Employment, Health, Education and Welfare: "Columbia's applied microeconomists study within a variety of subfields, including labor economics, health economics, and the economics of education." There is a particular section devoted to Market Shocks and Their Short and Long-Term Effects on Career Profiles. Here's an excerpt about research conducted by Professor Till von Watcher; it will make interesting reading for current graduates. The message seems to be: get a job sooner rather than later; even if that means emigrating or working in a low-paid internship. Even then, there will still be a career disadvantage in many cases.

Using a comparative approach between the labor markets of the U.S. and Europe, Till von Wachter studies the short and long-term effects of market shocks on workers' careers. In his paper, "The Short and Long-Term Effects of Graduating in a Recession (with Philip Oreopoulos and Andrew Heisz)," he uses the example of Canadian students graduating during a recession to show how the setbacks experienced by students entering into a temporarily inhospitable job market can have relatively permanent consequences which slowly fade only after about eight to ten years. Students graduating in a healthy market can maintain a significant advantage over the ones initially affected by the recession.

Consequences of Recession in Ireland?

The debate into the Irish recession has naturally focused on the banking system and the fiscal adjustment. Ireland ran a large bubble in property for at least five years that added to revenue, inflating both the public sector coffers and the banking systems balance sheets. When the financial crisis hit, the vulnerability of this situation became rapidly apparent and we have witnessed an astonishing increase in unemployment as well as collapse of our banking system and a need for rapid fiscal adjustment that has, among other things, reduced take-home pay of public servants.

One real shame about our current situation is the lack of data to monitor how it is actually affecting people. The current micro-data infrastructure of Household Budget Survey, SILC, SLAN, SHARE, QNHS and others is simply ill-equipped to examine events that occur at this level of frequency. Thus, we simply do not know how households are smoothing consumption through this time period. For example, we know that many people have taken drastic reductions in their housing wealth but do not know how this actually affects their day-to-day lives with respect to availability of credit. Nor do we have any real sense of the extent to which certain groups are facing hard liquidity constraints in ways that may lead to real consequences for health and life outcomes. Anecdotally, we are hearing reports of paid doctors visits declining as the recession bites but have no sense of whether people's health is being placed in jeopardy. Similarly, preliminary data suggests an increase in suicide rates, but we are unable to examine the mechanisms through which the economy impacts on psychological distress. Savings have increased sharply as has consumption has declined but the academic community has no way of providing any micro-founded explanation of why this is happening.

We have been collecting monthly panel data here to track things like risk perception but the research is still too early stage to provide sufficient sample sizes for sub-groups to answer the questions above. My personal new year's resolution is to get this to a state where we can start engaging properly with policy in Ireland. High-frequency (i.e. monthly) data delivered quickly to academic researchers in a manner comparable to other countries is the only solution to the massive knowledge hole that exists in Ireland at present. We need to speed up the delivery of data so that papers can be written that are scientifically robust and timely enough to actually enter into the debate.

Young People, Recession and Debate

The most affected group in Ireland and indeed elsewhere are people entering the labour market yet they are a very tiny squeek of noise in an otherwise roaring debate. If there is anyone who reads this blog who has ideas for getting students and other people around the age of 18-25 involved in the economic debate, feel free to comment here or just email. I don't know in advance whether anything useful could come of this but it seems crazy to be having old stand-by debates around the college campuses when this monster of an issue that directly affects everyone leaving school or graduating college in the next three years at least is roaring ahead without much attention.

Some of the questions that might be worth considering for public debate include:

- How bad is the current economy for people entering the labour market? How worried are school and college leavers?

- What role can and should migration play?

- Are there cultural trends emerging among people leaving school and college that are different from people who left prior to the recession? Are any of these positive? Which are particularly negative?

- What can be done by policymakers to avoid the worst outcomes for school and college leavers?

- Are college leavers interested in low-paid internships as an alternative to further study or unemployment? Are there pitfalls with having these systems?

- Are business start-ups a viable alternative for people leaving college?

- Is the social welfare system flexible enough to allow people to avail of work/study and related pathways?

Stop Worrying about the Recession: You're Scaring the Children

This and other anti-recession slogans are part of an add campaign sponsored by an anonymous US donor

link here

Vox: Calvo and Roo-King on Bubbles

How bad are bubbles for welfare is the question asked by Calvo and Roo-King in a recent Vox post. "This column weighs the costs and benefits of financial deregulation that spurs temporarily high growth that then collapse and suggests that bubbles may be socially efficient." They suggest that sometimes the benefits from creating a bubble that subsequently bursts may be higher than not having finance-led growth in the first place.

link here

Recessions and Sexually Transmitted Infections

A piece in today's Irish Times covers the issue of whether STI's might decline during a recession. We have talked a lot about this type of work on the blog including the Ruhm work indicating that acute health indicators improve during recessions. Certainly, friday and saturday nights (to the extent that I am actually out-and-about) seem quieter in Dublin. I am aware that one of our students is looking at this issue in a broad sense supervised by Kevin. Would be interesting to do a brief tracking study for the last 18 month in Ireland of key acute health indicators.

link here

The Man-Cession and U.S. Unemployment

Gerard O'Neill mentioned the idea of the "man-cession" recently. Brendan Walsh has documented the Irish case and shows that "female participation in the Irish labour market held up well in 2008, but male unemployment has risen, and participation fallen, faster".

A recent post from the Economist Blog notes the 2.5% difference between the male unemployment rate (10.5%) and female unemployment (8%) in the U.S. during May (the BLS figures came out last Friday). This is the highest male-female jobless rate gap in the history of BLS data back to 1948. Overall, the U.S. unemployment rate climbed to 9.4 percent on Friday, its highest point in a quarter-century. On the Economix blog, Catherine Rampell compares job losses in recent U.S. recessions as a share of employment.

However, some commentators suggest that Friday's jobs report qualifies as good news. According to David Leonhardt on the Economix blog, the unemployment rate is "known as a lagging indicator, because it continues to worsen for months even after the economy starts to improve. A better indicator is the monthly change in overall employment, and it suggests the worst job losses of the Great Recession may now be over". However, he also cautions that "the economy remains in very bad shape. A broader measure of job-market distress than the unemployment rate — one that counts, among others, part-time workers who want to be working full time — shows a rate of 16.4 percent." More on broad measures of job-market distress is available here.

Finally, it is also worth noting that 21 percent of those who are unemployed have been out of work for at least 15 weeks. That figure exceeds the 19.6 percent proportion in this category that was last seen during the 1958 recession. According to Floyd Norris on his NYT blog, the long-term unemployment rate shows that there is still a major problem in finding employment for people. Returning to the theme of the "man-cession", Catherine Rampell commented recently that women are now surpassing men in degrees attained in every major category in U.S. higher education: associate, bachelor’s, master’s, professional and doctorate. This may go some way to explaining why more women are holding on to their jobs in the U.S.

RAND Paper on Giving and Receiving Financial Help

Financial transfers between individuals are an important component of economic adjustment discussed in a recently released RAND Occassional Working Paper

link here

Benefits of Unemployment

As always, when posting on a topic like this I restate that I can probably claim to be among the most active people in the country researching and examining negative psychological consequences of the current recession and I have written about these now almost continuously. My purpose in raising the current issue is not to be flippant or cute but to start a counterbalancing discussion to help make sure that the research I am doing does not skewed by too strong priors. During our journal club today, the issue of the beneficial effects of unemployment were raised. On average, there are now countless papers demonstrating an average negative effect of unemployment on psychological well-being but its worth thinking about potential upsides for different groups of people

- During the initial spell, many people carry with them a redundancy payment. For people without large mortgage debts this redundancy payment can potentially finance life-improving capital purchases.

- For people with a high chance of reemployment, a brief spell of unemployment may provide a chance to rebalance health and personal factors particularly if they have working extremely hard during a boom. For example, people may be able to spend some time getting closer to their children or performing necessary upgrades to their homes.

- Some people may have become habitually constrained to a job that was not satisfying. Forced redundancy can act as a habit-breaker leading people to reassess their prospects and aim higher. For example, people may set up small businesses or upskill or otherwise try to improve their prospects.

- Increased leisure time.

Anyway, worth keeping in mind in the upcoming work on well-being and recession.

Student Drop Out and the Recession

This article discusses the possibility that some students whose parents can no longer afford to send them funds will start dropping out of college. Coming to UCD, TCD and so on without some parental support would be tricky although rents will be a lot lower in the City in September.

here

How Do You Feel About the Recession?

Liam asked recently: why do recessions feel bad?

He mentioned fear of the future, sadness due to the loss of posessions, and anger. In a recent blog-post, Derek Bownds suggests that money doesn't make us happy, certainty does (based on an Op-Ed piece from Daniel Gilbert in the N.Y. Times). Hence, uncertainty aversion?

ESRI: Ireland in Recession

The Cork Economics Blog mentions that there is a new page on the ESRI website providing links to academic research of relevance for understanding the ongoing recession in Ireland.

Is The Recession Making Students Study Harder?

University students in the UK study for two hours and 12 minutes more (per wek) now than they did two years ago, according to the Higher Education Policy Institute (HEPI). This institute surveyed 2,000 undergraduates on their degree workload, the size of their classes and their contact time with lecturers. The time UK students spend in lectures and seminars is the same as it was two years ago.

"Hepi found that on average the students, who were first and second years at universities in England, spent 29 hours per week studying for their degrees, compared to its survey two years ago when a similar cohort of 15,000 students told Hepi they spent 26.8 hours studying per week."

In 2007 Hepi found that students in England spend fewer hours studying than students elsewhere in Europe, with the average student in England putting in 25 hours per week compared with more than 30 in the Netherlands and 35 in France.

"Pam Tatlow, chief executive of the university thinktank Million+, said: "This is a very restricted survey of only 2,000 students with no indication of the response rate and just three questions asked, compared to previous reports which surveyed 15,000 students."

More details are available from the Guardian here. The Hepi report is available here.

The War on Unemployment

Last week's ESRI Labour Market Conference is summarised on the ESRI website here. The slides of all the presentations are available here. This makes for essential reading given ESRI forecasts that the unemployment rate this year is expected to average 13 percent, and in 2010 to rise to over 16 percent.

The first presentation by David Grubb (OECD) mentioned that when generous unemployment benefits exist, activation measures for unemployed individuals may be required. He contrasted the unemployment rates of recent years in Finland and Japan. Finland had much higher rates of unemployment than Japan the last time recesion hit, but it should also be noted that Finland has more generous unemployment benefits on offer. Grubb used this comparison to emphasise that labour market characteristics are important; and that we should not just be concerned about demand shocks. He also mentioned that work programmes are strategic i.e. it may be too expensive to put everyone on a work programme but that the existence of such programmes can act as a deterrent to disengaging from job search. Finally, Grubb advised that we should be ready for the time when unemployment starts falling. Activation policies should be in place so that we can push unemployment down further as it is falling.

Philip O'Connell asked what worked in the 1990's? The focus here was on how to avoid prolonged unemployment after recovery, so this was in the same vein as Grubb. O'Connell noted that we are entering a "male" unemployment problem (see Gerard O'Neill on Man-cession here), and that it is not a characteristically "middle-class" phenomenon, when looking at the QHNS between 2006 and 2008. The educational profile of unemployed males has evolved such that the biggest increases in unemployment for males occur for those with Leaving Certificate and PLC qualifications. On the other hand, the educational profile of unemployed females has evolved such that the biggest increases in unemployment for females occur for those with third-level qualifications. O'Connell noted that there is a higher educational profile of unemployed individuals compared to the 1990's, but as it was then, Junior Certificate holders and PLC graduates are most at risk now.

O'Connell also talked about job-training programmes, or active labour market programmes (ALMP'S), which is the broader term used in the international literature. In terms of what makes for an effective programme, O'Connell emphasised the impotance of minimizing deadweight, that is, the percentage who would have found a job without intervention. Out of different types of ALMP that can be used, O'Connell mentioned that:
(i) job search assistance is effective for many groups and is low cost
(ii) there is inconclusive evidence on formal training
(iii) some employment subsidies help long-term unemployed
(iv) there is little evidence of any positive effect from public sector job creation
O'Connell emphasised the mantra that 'prevention is better than cure' and that we should also strive to keep jobs rather than just making new ones. Despite this, there are challenges though. The unemployment rate of those who left school early in 2005 was 45% in 2006. In 2006, 1 in 5 males were working in the construction sector. O'Connell emphasised that the most effective education, training and employment programmes are those linked closely to labour market demand.

Jaakko Kiander (Director, Labour Institute for Economic Research, Helsinki) noted that the Finnish crisis in the 1990's was solved by currency devaluation. He noted that for countries within the Eurozone, deflation appears to be the only viable alternative, but that the adjustment process is slow and painful. A presecriptive emphasis on cost-cutting (particularly in wages), balancing of govt. finances and restoration of competitiveness featured prominently at the UCD School of Economics/Dublin Economics Workshop conference on 'Responding to the Crisis'. (Discussions about financial regulation and the property bubble also featured on that programme.)

Returning to direct labour market issues, Alan Barrett discussed "What Do Migrants Do in A Recession?". He firstly noted that immigrants have never been "over-represented" (compared to the Irish distribution) in the construction sector, but they have been more respresented in the hotel trade. In Q1 2008, 16.5% of the total number employed were non-Irish nationals. He also mentioned that Barrett and McCarthy (2007) documented an immigrant earnings disadvantage of 18%, relative to comparable natives, on average. There is no disadvantage for English speaking immigrants, so it seems there is an earnings premium to speaking the tongue of the host country. Finally, for background, Ireland absorbed a lot of inflow from accession states since 2004, and 20% of accession state immigrants are less likely to be in higher-skilled jobs. Barrett concludes that immigrants appear to be suffering a higher rate of job loss relative to natives and that a significant proportion appear to be reacting to job losses by staying here.

Philip O'Connell and Seamus McGuinness concluded the conference with a paper on profiling the unemployed. They suggested that profiling is the first part of a successful intervention, with targeted intervention being the second part of the process. In Q4 2006, benefit recipients in the Northwestern region were given a questionanire and subsequently tracked for 18 months. The research is essentially concerned with the following questions:
(i) Who is likely to stay on the Live Register?
(ii) Who is likely to leave the Live Register?
Factors surrounding labour mobility, transport, health, education and labour market history show up in the results. O'Connell and McGuinness emphasised that this work is a pilot-test; and also that profiling does not have to mean that somebody who is not targeted will not be allowed onto a programme.