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.