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Posts Tagged ‘immobility of labour’

The geographical immobility of labour in England – a social problem

Where you live in Great Britain can have a profound effect on your earning potential. According to a report published by the Social Mobility Commission, there is a growing geographical divide, with more affluent areas getting relatively richer, while ‘many other parts of the country are being left behind economically and hollowed out socially’.

The Commission uses a Social Mobility Index to rank the 324 local authorities in England. The index is a measure of the social mobility prospects for people from disadvantaged backgrounds. It is ‘made up of 16 key performance indicators spanning each major life stage’.

The index shows that children from disadvantaged backgrounds have lower educational attainment, poorer initial jobs and poorer prospects for advancement in the labour market. Often they are stuck in low paid jobs with little chance of getting on the housing ladder and fewer chances of moving away from the area.

The problem is not simply one of a North-South divide or one of inner cities versus the suburbs. Many inner-city areas have been regenerated, with high incomes and high social and geographical mobility. Other inner-city areas remain deprived.

The worst performing areas are remote rural or coastal areas and former industrial areas, where industries have closed. As the author of the report states in the Guardian article linked below:

These areas have fewer specialist teachers, fewer good schools, fewer good jobs and worse transport links. … Many of these areas have suffered from a lack of regeneration: few high-paying industries are located there, and they often exhibit relatively limited job opportunities and clusters of low pay.

The problem often exists within areas, with some streets exhibiting growing affluence, where the residents have high levels of social mobility, while other streets have poor housing and considerable levels of poverty and deprivation. Average incomes for such areas thus mask this type of growing divide within areas. Indeed, some of the richest areas have worse outcomes for disadvantaged children than generally poorer areas.

There are various regional and local multiplier effects that worsen the situation. Where people from disadvantaged backgrounds are successful, they tend to move away from the deprived areas to more affluent ones, thereby boosting the local economy in such areas and providing no stimulus to the deprived areas. And so the divide grows.

Policies, according to the report, need to focus public investment, and incentives for private investment, in deprived areas. They should not focus simply on whole regions. You can read the specific policy recommendations in the articles below.

Articles
Social mobility is a stark postcode lottery. Too many in Britain are being left behind The Guardian, Alan Milburn (28/11/17)
State of the Nation – Sector Response FE News (28/11/17)
Social mobility: the worst places to grow up poor BBC News, Judith Burns and Adina Campbell (28/11/17)
How Britain’s richest regions offer worst prospects for poor young people Independent, May Bulman (28/11/17)
Small Towns Worst Places In Britain For Social Mobility, New ‘State Of The Nation’ Report Reveals Huffington Post, Paul Waugh (28/11/17)

Report
Social mobility in Great Britain: fifth state of the nation report Social Mobility Commission, News (28/11/17)
Fifth State of the Nation Report Social Mobility Commission, News (28/11/17)

Questions

  1. Explain how local multipliers operate.
  2. What is the relationship between social immobility as identified in the report and the elasticity of supply of labour in specific jobs?
  3. What is the link between geographical, occupational and social mobility?
  4. Explain why, apart from London, English cities are ‘punching below their weight on social mobility outcomes’.
  5. Go through each of the key policy recommendations of the report and consider the feasibility of introducing them.
  6. What policies could be adopted to retain good teachers in schools in deprived areas?
  7. To what extent might an increased provision of training ease the problem of social mobility?
  8. Investigate policies adopted in other European countries to tackle local deprivation. Are there lessons that can be learned by the UK government, devolved governments, local authorities or other agencies?
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Equal pay for equal work?

The earnings gap between men and women is well-documented and depending on how we measure it, we get different figures. One of the most common measures is mean earnings per hour. The latest estimates suggest that women are paid around 20% less than men, though other data does give lower figures. Though actions have been taken to reduce the inequality between men and women, it still persists in many areas and this has led to plans for new league tables from Nicky Morgan.

The inequality gap has certainly come down. Back in 1970, the wage differential was around 37 per cent, so progress has been made, although the wage gap in the UK has stabilised somewhat. The gender wage gap is at least in part explained by occupations, as women have tended to be prevalent in some of the more poorly paid occupations. However, significant earnings differentials still exist within occupations. We see fewer women in the more senior positions; women tend to take career breaks and hence this can cause more investment into training and promoting men. Furthermore, we often simply see some form of prejudice or discrimination whereby women are just paid less than men, despite the Equal Pay Act.

As a means of combatting this inequality, Nicky Morgan, the Women and Equalities Minister, has announced plans that will require private companies and voluntary organisations employing more than 250 workers to reveal their pay gap. They will have to produce this information online and this will a means to bring down the inequality that exists between men and women in the same occupations. The first League Table of this pay gap will be published in April 2018 so companies will have to begin compiling the information from April 2017. This has received criticism from some, as it is not starting soon enough, but it is seen as a step in the right direction.

Carolyn Fairbairn, CBI Director-General warned that these League Tables shouldn’t be used to name and shame firms, as many factors might explain wage differentials. She noted:

“Where reporting can be useful is as a prompt for companies to ask the right questions about how they can eradicate the gender pay gap … The government should consult closely with business to ensure that this new legislation helps close the gender pay gap, rather than ending up as a box-ticking exercise.”

Clearly there are some close links between the gender pay gap and concerns about poverty and minimum wages and although the League Tables perhaps should not be used to name and shame, one might think it is inevitable that this is how they will be viewed. The following articles consider Nicky Morgan’s inequality plans.

Reports
Gender Pay Gap European Commission
Annual Survey of Hours and Earnings, 2015 Provisional Results Office for National Statistics (November 2015)
Pay gap reporting Equal Pay Portal2016

Articles
Gender pay gap reporting for big firms to start in 2018 Guardian, Rowena Mason (12/02/16)
Gender pay gap to be revealed by employers to tackle inequality Financial Times, Sarah O’Connor (12/02/16)
Firms forced to reveal gender pay gap BBC News (12/02/16)
Gender pay gap League Tables to ‘name and shame’ companies Telegraph, Steven Swinford (12/02/16)
UK companies must reveal gender pay gap under new plans Independent, Oliver Wright (12/02/16)
Companies told to publish gender pay gap Sky News (12/102/16)
Gender pay gap: Business groups mixed on Nicky Morgan’s new name-and-shame plans International Business Times, Bauke Schram (12/02/16)
Now every firm with more than 250 staff must put gender pay gap data online in move to encourage companies to reward staff equally Mail Online, Jack Doyle and Rosie Taylor (12/02/16)

Questions

  1. Use a labour market diagram to explain how gender pay gaps can emerge based on different marginal products.
  2. How can gender pay gaps emerge because of women taking career breaks and being less geographically mobile?
  3. Use information on the ONS website to compare pay differentials across occupations. Are the biggest and smallest differentials where you would expect?
  4. There are numerous reasons why men have traditionally been paid more than women. Which reasons could be said to be irrational and which are rational?
  5. If employers were forced to give genuinely equal pay for equal work, how would this affect the employment of women and men? What would determine the magnitude of these effects?
  6. Do you think this naming and shaming will be effective in reducing the gender pay gap amongst the largest companies? Can you suggest any other policy options?
  7. If the Equal Pay Act is in place, why can companies still pay women less?
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