Essays in social policy and labour economics

The four sections in this thesis examine some key changes that have occurred in Ireland over the last three decades. Over the period examined Ireland has undergone huge economic and social change. This thesis examines some key aspects of these changes. During this time Ireland has witnessed a recession in the 1980s followed by a period of rapid economic growth in the 1990s and the early 2000’s. The thesis begins by examining the impact these economic changes have had on redistributive tastes (Section One). It has witnessed large increases in female participation rates, which is exploited to examine the impact on occupational segregation (Section Two) as well as divorce legalisation in 1997 which is used as a natural experiment to examine the impact on female labour supply and participation rates (Section Three). Finally, the latter period examined, the mid to late 2000s, has seen a return to recession coupled with a collapse of the construction sector. In light of this collapse the impact the construction boom had on the male human capital investment decision is examined (Section Four). Section One; Tax Benefit Revealed Restrictive Preferences Over Time: Ireland 1987-2005 This section examines the redistributive preferences of successive governments over nearly three decades in Ireland. During this time Ireland underwent a sizeable recession followed by a period of sharp economic growth known as the ‘Celtic Tiger’. By inverting Saez’s (2002) model of optimal income taxation it is possible to characterise the redistributive preferences of successive Irish Governments between 1987 and 2005. The (marginal) social welfare function revealed by this approach is consistently comparable over time and show great stability despite profound changes in market incomes and important fiscal reforms over the period. Results are robust to numerous checks regarding data, income concepts and elasticities. A comparison with the U. K. shows marked differences reflecting the narrow political spectrum in Ireland compared to radical changes in British politics over the past 30 years. Some ‘anomalies’ in the revealed social welfare function suggests introducing transfers to the working poor. Section Two: Female Labour Supply and Divorce: New Evidence from Ireland If participation in the labour market helps to secure women’s outside options in the case of divorce/separation, an increase in the perceived risk of martial dissolution may accelerate the increase in female labour supply. This simple prediction has been tested in the literature using time and/or spatial variation in the U. S. divorce legislation. This paper tests this hypothesis by exploiting a more radical policy change i. e. the actual legalisation an acceleration of marriage breakdown rates. This fundamental change in Irish society is used as a natural experiment. Using families for whom the risk of marital dissolution is small as a control group, difference-in-difference estimates suggest that the legalisation of divorce contributed to a significant increase in female labour supply, occurring essentially at the extensive margin. Results are not driven by selection and are robust to numerous specification checks, including the introduction of household fixed effects and propensity score reweighting.