Modelling and Measuring Gains from Labour Market Desegregation in Northern Ireland

Abstract

Over the past decades, Catholic-Protestant relations in Northern Ireland have gradually improved. Agglomeration theories would predict that the resulting workplace desegregation would increase productivity. This paper presents a model of the impact of labour force segregation on the agglomeration benefits of matching. The paper then provides the first thorough, micro-level estimate of employment desegregation in Northern Ireland since 2001. Finally, the calibrated model estimates the effect of desegregation on output, wages, and number of firms. The model estimates that each percentage point decrease in segregation would increase net output by 0.04 per cent to 0.29 per cent.