Political reform: the puzzling argument for reducing the size of Dáil Éireann

A recurrent proposal in the ongoing debate about institutional reform in Ireland is that the number of members of Dáil Éireann be reduced from the current level of 166.  Perhaps this particular proposal receives prominence because it’s relatively easily understood, and is seen by some as a satisfyingly visible response to widespread alienation from politicians and politics as practised in Ireland. It receives additional and weighty support from the most recent (and much more wide-ranging) article in the Irish Times series on political and economic renewal, by UCD Professor David Farrell which you can read here.

While appreciating that it’s perhaps unfair to evaluate any one such proposal in isolation from the broader set of ideas with which it’s typically linked, I’m genuinely puzzled as to why it seems to have such immediate resonance and support, beyond the generalised antipathy towards elected politicians, an antipathy which some of them seem willing to enable, by competing to support a culling of their present –and future–numbers.

Let me explain why I think the reasoning behind this sort of proposal is problematic, with a nod towards a little naive economics argument towards the end.

Continue reading “Political reform: the puzzling argument for reducing the size of Dáil Éireann”

2009 GNP: -11.3%; 2009 GDP: -7.1%; 2009 CA/GDP: -2.8%

More releases from the CSO:

The latest national accounts release shows the scale of the contraction in 2009, with national income falling far more than the decline in production (the foreign-owned firms doing better than domestic firms).

The BOP release shows that the current account deficit has narrowed to 2.8% of GDP.

Bad News from the QNHS

Yesterday’s QNHS report paints a picture of a very depressed labour market. The seasonally adjusted unemployment rate for the fourth quarter of 2009 was 13.1%.

It is perhaps worth reminding readers of how the unemployment rate is measured in Ireland. The QNHS, a large nationally representative survey, provides the official measure of the unemployment rate. The survey asks questions to assess whether the person is really participating in the labour force and then, if this is the case, whether they are in employment. So the survey provides measures of both the labour force participation rate and the unemployment rate. 

The QNHS takes some time to process, so it’s release is not very timely. For this reason, the CSO also publishes a “seasonally adjusted standardised unemployment rate” which extrapolates from the most recent QNHS data using Live Register figures on the number of people claiming benefits. Sometime this extrapolation is accurate, sometimes it’s not.

In the case of 2009:Q4, the extrapolation was not accurate. The most recent Live Register release, reported standardised unemployment rates of 12.4 in October, 12.4 in November and 12.5 in December. These data had suggested that the unemployment rate was flattening out. However, the QNHS now reports that the seasonally adjusted unemployment rate rose from 12.5% in 2009:Q3 to 13.1% in 2009:Q4.  

The most recent Live Register release reported an unemployment rate of 12.6% in February. A simple extrapolation from the QNHS release would suggest that this would be revised up to 13.3%.  Overall, the picture has changed somewhat from one in which the unemployment rate appeared to be flattening to one where it still seems to be rising.

A noteworthy feature of the QNHS data is that the increase in the unemployment rate is occurring despite a significant decline in the participation rate. This rate has dropped from 64.1% in 2007:Q4 to 61.5%. For comparison the decline in participation in the UK and US over roughly the same periods has been about one percentage point. So this is an extra 2.5% of the labour force that is no longer counted as unemployed because they are not looking for work.

Perhaps surprisingly, the decline in participation has been most concentrated amongst men. The male participation rate has declined from 73.5% in 2007:Q4 to 69.7% in 2009:Q4 while the comparable decline for females has been from 54.7% to 53.5%. One possible explanation has been the concentration of job losses in the construction sector. Very few women worked in the construction sector, while male construction employment has declined from a peak of 263,000 in 2007:Q2 to 122,000 in 2009:Q4. The decline in male participation may reflect discouraged former construction workers leaving the labour force.

The male unemployment rate, which prior to the recession was similar to the female rate, has risen from 4.8% in 2007:Q3 to 16.6% in 2009:Q4. The comparable rise in the female unemployment rate has been from 4.0% to 9.0%.

Finally, the data show that long-term unemployment is becoming a more important factor. The QNHS shows that by 2009:Q4, one third of the unemployed had been out of work for more than a year; this share was up from one-fifth at the start of the year.

Interviews with R. C. Geary

John Bowman has put together two clips based on interviews with R. C. Geary to commemorate the ESRI at 50. The first of these was broadcast on RTE last Sunday (March 21st) and may be played back here.
It is vintage stuff and well worth listening to. He tells a great joke about old age at the end of the clip.
Younger econometricians among you will be amused to learn that the reason he advocated the Geary tau test for autocorrelation as an alternative to the Durbin-Watson was that it saved on computational effort!
The next programme with be on Sunday morning (28th March).

Visualising Economic Data

Aidan Kane is doing some amazing things with the dynamic presentation of economic data on his blog.

See here for a moving scatter plot of US inflation and unemployment (once downloaded, press play to start).   And here for an evolving population pyramid for Ireland based on CSO data.  Check out the blog itself for explanations of what you are seeing.