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The Literacy Hour

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					 Life Chances and Place –
 Respondent Comments

           Stephen Machin,

Social Mobility and Life Chances Forum,
   HM Treasury, November 14 2005
                   Issues

• Falling social     mobility   and       rising
  inequalities.

• Role of place and space behind these.

• Connections to policy.
            Structure of talk
• Recap on falling social mobility, rising inequality
  and increased demand for education

• Place:    - jobs

            - education

            - crime
            What is going on?
        1. Declining social mobility
                      Mobility Parameter            Cross-    Sample sizes
             (Coefficient on log(income) at age 16) Cohort
                                                    Change
Earnings:      1958 Cohort        1970 Cohort
NCDS 1991;       (NCDS)             (BCS)
BCS 2000.

Sons            .166 (.020)        .260 (.024)        .095    NCDS: 2246
                                                     (.031)   BCS: 2053

Daughters       .168 (.022)        .227 (.022)        .059    NCDS: 1908
                                                     (.031)   BCS: 2017
            What is going on?
      1. Declining social mobility –
       role of measured education
                            Cross-Cohort Change




Sons: Basic                     .095 (.031)
Sons: Plus Education            .078 (.031)

Daughters: Basic                .059 (.031)

Daughters: Plus Education       .036 (.029)
         What is going on?
     2. Rising wage inequality
                       Change by Percentile 1975-2004
         .8
         .7
         .6
         .5
Change


         .4
         .3
         .2
         .1




              0   10   20   30   40      50      60   70   80   90   100
                                      Percentile
              What is going on?
     3. Increased demand for education
                                                      UK Labor Force Survey/General Household Survey


                                 % Graduate Share of Employment                             Relative Weekly
                                                                                            Wage (Full-Time)

   1980                                        5.0                                                1.48
   1985                                        9.8                                                1.50
   1990                                        10.2                                               1.60
   1995                                        14.0                                               1.60
   2000                                        17.2                                               1.64
   2004                                        21.0                                               1.64




   1980-2004                                   16.0                                               .16
   1980-1990                                   5.2                                                .12
   1990-2000                                   7.0                                                .04
   2000-2004                                   3.8                                                .00

Notes: Sample is all people age 18-64 in work and earning, except for relative wages which are defined for full-time workers. The relative
wage ratios are derived from coefficient estimates on a graduate dummy variable in semi-log earnings equations controlling for age, age
squared and gender (they are the exponent of the coefficient on the graduate dummy).
    What is going on?
4. Lousy jobs, lovely jobs
  Spatial Aspects of Skills and the
          Labour Market
• Regional differences in employment are almost
  non-existent for graduates and extremely marked
  for those with no educational qualifications. The
  latter are highly persistent over time.

• Marked contrast to US, for example, where state
  differences in unemployment rates are short-lived
  (Blanchard and Katz, 1992).
   Male Employment Rates –
Regional Differences by Education
                                      Com parision of Working Age Male Em ploym ent Rates by Region


                            94

                                                                                                                   EMid
                                                                                                            Rest of Scot .
                            92                                                          NI


                                               Scot                    WMid
                                                                                                                                               Rest of S.E.
                            90         T&W
         Men with Degrees




                                                                                                                        Out er London
                                                                                   Rest of Nort h

                                                                              GMan                  WYork
                            88                                                                                            Rest of W.Midlands


                                                                                                         Rest of N.W.                                         EAng
                                                                                                Rest of Yorkshire

                            86
                                                      Wales                                                                       SW

                                               Inner London
                                             Mersey
                            84
                                                               SYork




                            82
                                 45   50                      55              60                      65                       70                       75           80
                                                                       Men w ith No qualification


Source: ONS (2004) Labour Force Survey
Spatial Differences in Basic Literacy
                (2002/3)
        Skills for Life Survey
  (Entry Level = Less Than GCSE Grade G)
Spatial Differences in Basic
         Numeracy
(Entry Level = Less Than GCSE Grade G)
Spatial Differences in Crime
         Policy Issues:
 Moving the Low Skilled to Jobs?
• Regional mobility is only marginally higher
  among the unemployed than the employed,
  but is much higher amongst graduates (2 to
  3 times higher) than the least qualified.
• People migrate across regions much more
  due to job openings than because of
  concentrated regional unemployment.
         Policy Issues:
 Moving the Low Skilled to Jobs?
• The low skilled/educated have much more
  difficulty in securing information about job
  opportunities outside of their local area as
  compared to the more national market for
  graduates.
• Housing markets exacerbate this – large
  regional differences in housing costs; social
  housing constrained by subsidies.
         Policy Issues:
 Moving Low Skilled Jobs to Low
        Demand Areas?
• If low skilled labour is geographically fixed, then
  why do low skilled jobs not move to low demand
  areas?
• Probably used to more, with manufacturing jobs.
• But new form of low wage jobs are more in
  demand where consumption is high in the local
  area (Goos-Manning) – these tend to be retail and
  leisure goods serving more affluent consumers, so
  the opposite occurs.
• Leads to issues of concentrated neighbourhood
  deprivation.
               Summary
• Spatial inequalities and existence of
  neighbourhood effects likely to be
  important determinants of restricted social
  mobility and intra- and inter-generational
  inequalities.

• On jobs, clearly reinforced by lack of
  mobility.
                  Summary
• Therefore seems important to try and generate
  sources of high value added economic activity in
  areas and communities characterised by
  disadvantage.

• Thus      important      role     for   education,
  notwithstanding issues of spatial segregation and
  sorting (especially for schools where families will
  pay significant amounts for higher school quality
  in terms of higher house prices).
                 Summary
• Some of the spatially targeted government policies
  (Excellence in Cities, Street Crime Initiative) do
  seem to have improved education and crime
  outcomes, so there can be an important role for
  policy in terms of area regeneration.
• There still remain many outstanding issues on
  place and space and how they connect to social
  mobility: like those to do with delivery of public
  services and spatial segregation in the need to
  make neighbourhoods more attractive to people
  from all social backgrounds.

				
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