Immigration patterns to Ireland have changed radically and differently from other developed economies.

According to Economic and Social Research Institute (ESRI) research, immigration in recent years has actually helped to reduce income inequality across the State. This is the opposite of what happened in the early 1990s and contrasts directly with the US experience. However, the pattern may be reversing as increasing numbers of lower-skilled people are now immigrating to the State.

In a paper delivered to the Organisation for Economic Co-operation and Development earlier this month, ESRI economist Dr Alan Barrett also contends that men who have lived abroad earn around 10 per cent more than those who stayed in Ireland. Women, however, do not see this benefit.

Many of those who returned to Ireland in the last decade were highly educated people who had emigrated in the 1980s, in the so-called brain drain.

Thus it could be expected that the returners would also be better educated. In fact on average those who returned were the best educated of those who left in the 1980s - leading to a greater supply of educated people available to take up jobs.

The differences were particularly striking in younger age groups. For example, 26 per cent of returned migrants aged 20-24 had university degrees compared to just over 8 per cent of those who had not emigrated.

In contrast, 39 per cent of those aged between 30 and 39 had only a Leaving Certificate compared with 22 per cent of those who were returning emigrants.

This resulted in a narrowing of the income inequality gap. Between 1987 and 1994 Ireland experienced a substantial increase in earnings inequality. One measurement that compares hourly earnings for the top 10 per cent and the bottom 10 per cent of earners showed the ratio increasing from 4.16 to 4.77. However, between 1994 and 1997 the ratio was largely unchanged.

This was also reflected in numbers returning to education. Post-1987 substantial numbers enrolled in university. However, after 1994 the numbers evened out as the earnings incentive for a university education also flattened out.

Between 1994 and 1997 there was a net inflow of 16,400 people into Ireland, made up of returning emigrants and non-Irish immigrants in roughly equal proportions. But this hides very large differences between age groups. There was a net outflow of 44,100 among the under-25s and a net inflow of 27,000 in the 25-44 age group. According to Dr Barrett the increase in the supply of skilled middle-aged workers may have reduced wage pressures and halted the increase in the return to university degrees.

The overall result of the 3.2 per cent increase in skilled labour supply was that wage rates were 4.7 per cent lower than they would otherwise have been in the absence of immigration. Gross National Product was 1.5 per cent higher than it would have been and unemployment was 0.7 percentage points lower than it would have been.

This is in contrast to the US, where recent immigration has been less skilled than the population as a whole. The resultant competition for jobs at the lower end of the earnings scale has contributed to an increase in earnings inequality.

Dr Barrett also found that male returners earn 10 per cent more than males who remained in Ireland. Interviewing 800 people who graduated in 1992, he asked whether they had originally left for "an adventure" or "to see the world", or for labour market reasons such as to get a job or a better job or to pursue further education. It appears that men who left for labour market reasons earn about 15 per cent more than those who stayed at home, but there was no wage advantage for those who left for reasons of adventure.

There was no wage advantage for female returners. There is some evidence to suggest women are more likely to return for family-related reasons and this may not allow them to derive full benefit for their time away, but such evidence is weak. But last year the position appeared to begin going into reverse.

The numbers of returning Irish dropped from 26,000 to 18,000, with numbers from the UK also falling. However, the number of people coming to work here from the rest of the EU increased - the majority would not be Irish. There has been no research to date on their level of skills or education. But there was also a dramatic pick up in the numbers of people coming from the rest of the world - from 4,500 in 1997 to 18,000 last year and 14,000 in the first five months of 2001. Of the 18,000 last year, more than 30 per cent or 7,000 were employed in agriculture and fisheries or catering.

This reversal could mean that competition for the highly skilled jobs will ease back somewhat and wages are thus likely to start escalating further, with or without another national agreement. The paper will be published by the ESRI in July.