JOB MOBILITY IN BRITAIN: ARE THE SCOTS DIFFERENT? EVIDENCE FROM THE BHPS†
| Published date | 01 August 2004 |
| DOI | http://doi.org/10.1111/j.0036-9292.2004.00309.x |
| Date | 01 August 2004 |
| Author | Axel Heitmueller |
JOB MOBILITY IN BRITAIN:
ARE THE SCOTS DIFFERENT?
EVIDENCE FROM THE BHPS
w
Axel Heitmueller
n
Abstract
The Scottish extension-sample of the British Household Panel Study (BHPS) is
used to shed light on differences in job mobility patterns in England and Scotland
for both men and women. Based on probit estimates of the overall mobility rate, a
new decomposition technique is applied to distinguish between explained and
unexplained differences. Furthermore, exploiting data on the number of job
changes, a zero inflated Poisson model is estimated to provide information on
possible differences in the expected number of job changes. Overall, there is
evidence that suggests significant differences in mobility patterns south and north
of the Borders; however, this is confined to men. Yet, whether this suffices to justify
a heterogeneous regional labour market remains to be seen.
I Intro ductio n
Since 1 July, 1999, Scotland has had a devolved Parliament armed with
numerous constitutional powers. Advocates of the devolution process put strong
emphasis on existing economic differences between Scotland on the one hand
and the rest of Britain on the other, in order to justify independent policies for
the two countries.
1
However, surprisingly little research has been done, not only
in the Scottish case, but generally to detect potential regional differences, a fact
that might have been due to data limitations in the past. Yet, simultaneously
with the devolution an extension-sample of the British Household Panel Study
(BHPS) for Scotland has been launched to enable independent and representa-
tive research on a regional level.
Pro-devolutionists have drawn attention to various differences between the
English and Scottish economies such as the labour market and unemployment in
particular. While unemployment rates are relatively low by European standards
w
Winner of the 2003 Cairncross Prize: Best Paper by a Young Economist Presented at the
Scottish Economics Society Conference.
n
IZA Bonn, London Business School, DWP
1
However, even in the absence of such differences there might be an argument for an
independent regional policy as long as the outcome is superior and more efficient than a nation
wide approach.
Scottish Journal of Political Economy, Vol. 51, No. 3, August 2004
rScottish Economic Society 2004, Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK
and 350 Main Street, Malden, MA 02148, USA
329
in many parts of Britain, Scotland experiences above average rates. One reason
might be a different industrial composition between the two countries. Another
explanation may lie in regional differences in the labour market flexibility, which
are not fully addressed by a national policy.
Hence, this paper sets out to compare job mobility patterns between England
and Scotland two years after the first Scottish Parliament moved into place using
wave one and two of the extension-sample. As the results will show, there are
indeed differences. However, this must not necessarily justify an independent
regional labour market policy as will be argued.
Why do individuals switch jobs or occupations? Placing some trust into the
rationality assumption, changes occur whenever individuals maximise their
expected utility from doing so. An example may be the search for a better job
match. Assume jobs are experience goods and, as such, their attributes are only
revealed once the position has been taken (Jovanovic, 1979). Thus, individuals
may leave a firm or occupation in order to improve the match. Yet, since
experience increases with age, job mobility is expected to be higher among
younger individuals, decreasing with job tenure.
Specific human capital theory (e.g. Becker, 1962) provides a rational why
tenure and separation rates are negatively correlated. Over time, individuals gain
knowledge on the job and thus increase their productivity. However, this human
capital is partly specific to the task or firm and is consequently worthless in the
wider labour market. Therefore, staying at the same firm is beneficial for both
employee and employer, productivity gains are shared and voluntary quits and
layoffs become less frequent.
However, not only labour supply impacts on job mobility. From the firms
point of view, labour is an input and its quantity is determined by its costs.
Hence, jobs are made redundant whenever the benefits, in terms of higher profits,
exceed the costs of doing so. Booth et al. (1999) bring forward various examples
such as permanent exogenous shocks, skill obsolescence as a consequence of
technological changes and downward rigidity of wages. Furthermore, they refer
to institutional and cultural factors as sources of job changes.
Several studies have analysed job mobility and occupational changes in
Britain. The majority of them have focused on specific sub-groups of the
population or aspects of mobility. For example, Harper (1995) uses data from
the National Training Survey on occupational mobility of British males. Owen
and Green (1992), on the other hand, shed light on labour market experience
and occupational changes amongst ethnic groups, applying Labour Force
Survey data. Drawing from the same source, Gregg and Wadsworth (1995)
highlight patterns in job tenure, turnover and security from the mid seventies
until the early nineties. Furthermore, Dalton and Kidd (1998) investigate the
relationship between different forms of human capital investments and their
impact on job and occupational mobility. Of particular interest for this paper
are the studies by Booth and Francesconi (2000) and Booth et al. (1999), as both
apply data from the BHPS.
Although difficult to compare in terms of data and methodology, some
general results can be derived from the above studies. First, young people are far
AXEL HEITMUELLER330
rScottish Economic Society 2004
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