Who makes it up the London Escalator?

ambition, migration and advancement in a big city labour market  

Ian GordonGeography Department and Spatial Economics Research Centre

London School of Economics

LSE London Monday seminar, 17th January 2011

Escalators paved with gold?

‘Start spreading the news ...... these vagabond shoes are longing to stray ..... right through the very heart of it’

But Who Makes it Up ?Maybe not the poor orphan of

legend‘Contrary to popular belief, Dick Whittington was

not a poor, ill-treated orphan who managed against all the odds to work his way up to Lord Mayor. Coming from a wealthy family, Richard Whittington had a successful business and civic career before he became Lord Mayor. [and] carved out a successful business career in a very practical way as a mercer (dealer in costly fabrics such as silk), wool merchant and royal financier’. Corporation of London web site

But perhaps the most professionally ambitious

‘I want to wake up in a city, that never sleeps .. and find I’m a number one .. top of the list, king of the hill …

‘If I can make it there, I’m gonna make it anywhere …. It’s up to you ……’

New York, New York

‘when we started, the limits of our ambition was just to be the best f ...ing band in London. We disdained the provinces; it was a real London mind-set. But once the world beckoned ……… ’

K. Richards, Life, 2010

Or the Foxiest ?

Outline1. Context and motivation2. Sketch of theory3. Methods4. Results from LFS and BHPS

analyses5. Some conclusions

Context & Motivation

Context• Part of SERC project on skills, migration and labour markets

– with Champion/Coombes (working on Census LS data cf LFS / BHPS)• Inspired by Fielding’s classic papers on South East England

(=extended London region) as ‘escalator region’ in 1970s/80s• Seeking to update/extend to wider range of British city-

regions– Given even greater concentration of graduate jobs in London

• 50% above average• 75% filled by migrants from RUK / overseas• All net RUK migrants now graduates

• And shift focus from inter-class mobility to human capital acquisition + selectivity of mobility / effects & people vs place – via Glaeser et al on agglomeration / labour market effects

• Potential policy interests in relation to:• LT equity / efficiency impacts of agglomerating advanced jobs in core+ Question of how far life chances (for natives) really vary between core /

periphery - If migration can get you on the escalator

What Needs to be Explained

Stylised Facts from Fielding studies:• Existing workers (as well as entrants from education) move

further/faster up occupational ladder if based in London/SE• Effect is particularly strong for migrants to the region• But significant proportion of the beneficiaries subsequently

move onMore generally:• Why it is that young/qualified migrants are drawn to

dynamic city economies - if real incomes for given jobs/quals are no higher ?= Aspect of a more general issue for neo-classical models of

labour migration• if migration is equilibriating but costly, why does any individual

choose to make a move - rather than wait for others to do so ?

2. Sketch of Theory• Acquiring Competences• Locational Implications and

Selectivity• Signalling• Life / career Cycles• Summary of Expectations

Acquiring competencesTwo elements of human capital:• Static: current competences of value for some activities • Dynamic: capacity/disposition (‘ambition’) to use

opportunities on/around job (or study) to add, develop/extend competences

Variability of jobs in opportunities for competence dev.:

• Inherently – in relation to job requirements (specialisation, programmability, novelty/proximity to cutting-edge)

• By design – employers’ choice to inhibit / encourage workers efforts to develop competences of value inside/outside org.

Locational Implications & Selectivity

Workers with strong disposition / capacity to develop HC on the job should choose:– Jobs with more positive opportunities– Locations with more such jobs– Dense / dynamic flexible labour markets

• with maximum chances to secure financial rewards for acquired HC• without need to incur high movement costs

– To organise lives to minimise costs of any necessary movement

→ particular attraction to agglomerations with:• High order/non-routine functions• Many employers + Flexible / high turnover labour markets

Employers needing such workers (learners / explorers) should also be drawn there

SignallingInformation is problematic / asymmetric both for:• Dynamic aspect of Human Capital

• Not certified – and may lapse• Opportunities for development offered by jobs

Both workers and firms with real interest in development may signal this by:

• locating in dense agglomerations with many similar employers, despite:

• Higher money wages • Not particularly high real wages (for competence levels)

Life / Career cycles• People initially attracted to, and benefitting

from agglomerations for HC developmental reasons may subsequently move on because:• Interest, capacity and benefits from further on

job/local learning diminish with age / success / superior knowledge

• for individual and/or employers• Incidental cultural characteristics of dynamic /

developmental agglomerations fall off /invert with age / success / stability

Summary of ExpectationsEscalating = combined effect of:a) individuals’ dynamic HC / ambitionb) firms’ need for/tolerance of learners in partic job typesc) thick, competitive urban labour marketsGeography of escalators = consequence of;• spatial selectiveness of (a) and (b)• plus agglomeration effects on (c)Very uneven outcomes individually and spatially • as consequence of positive feedback between these• maybe just one dominant escalatorOccupational advancement = key motive for

migration – in 2 distinct forms:• internal (non-localised) labour markets – career tracks• inter-firm, private markets with stronger spatialised

characterMigrants should advance faster• but partly as effect of self-selection

METHODS

Scaling the Occupational Ladder• Want a continuous measure of progress

– cf. Fielding focus on discrete inter-class shifts • Job types involve unique combinations of human capital

– required for and / or generated by the work• in competitive lm: pay rates reflect prices for each

element• and reflecting overall s & d: marginal prod +

marginal cost • Used 2-dimensional job classification:

– 4 digit occupations (371)– 4 managerial / supervisory status categories

• JS scale value for each =– average hourly earnings (LFS) - logged

• Combining direct and regression estimates, depending on n

– standardised for contextual influences • year, region, firm size

 A Measure of Ambition•Conceived of as - a disposition to seek advancement by acquiring employment-relevant human and social capital

•Distinct from (immediate) material objectives / needs – and from social function of work

•Measure - based on two pairs of questions from 1991 /1999 BHPS waves about two most important aspects of ‘work’ and a desirable job:

•Scoring positively: promotion, career, initiative, job content•Scoring negatively: to afford essentials, people’s company•Ignoring: pay, security, hours, relations with manager

•U-shaped relation with (current) age - •apparently lowered when first enter couplehood•= part of reason for rather weak correlation across waves• operational measure based on:

(a) standardising for age & and scaling to 0-1 range; then (b) averaging 1991 and 1999 scores

•Related positively to qualifications + parental social class•Also current region of residence, but not that of birthplace

• effect rather than cause ?

3 Modelling Issues• Explaining levels or changes

– trade-off = sample sizes versus process interest– both used here

• The significance of lagged dependent variables– real effect of depreciation of human capital ? and/or– spurious reflection of measurement errors + other transient

‘noise’– some efforts at modelling – but results here based on trial

values• High proportion of JS ‘stayers’ – esp. in short run;

– under-stated where measurement / coding not consistent– but exclude (at least for sig tests) because non-normal JS

17 year JS Change (BHPS)

Two Data Sources

Labour Force Survey:– Regular, factual, very large sample– Longitudinal element only 12 months, by

• 5 quarter panel structure – all vars but no movers and ?of coding consistency

• Job / residence year ago ?s for all – memory but consistent

British Household Panel Study– 18 waves 1991-2008 with core of repeated questions

+ occasional extra attitudinal ones– Much smaller sample subject to attrition

RESULTS

1. Levels of Occupational Attainment

LevelsLFS shows:

– For given age + qualifications: JS score• much higher for those working in Central London• high also for rest of Greater South East• only 2 of other 7 conurbations above UK average

– Significant contributor to core’s higher earnings / productivity

BHPS shows:– Ambition as important as qualifications– Family background matters– Region of current residence (all of GSE) significant

• not that of birth

2. Occupational Progression over Time

ChangesLFS (1 year) shows:

– All under 50s with degrees progress a bit more– But effect really concentrated among sub-set

who:• migrated inter-regionally; and • work in Central London

BHPS (15 years) shows:– Apart from those gaining new qualifs (degrees)– Escalator benefit concentrated on:

• Ambitious people spending time as GSE residents

Conclusions

Conclusions• Seems clear evidence of escalator effects

for:– Central London workers and/or GSE residents– Maybe largely for migrants– But may just reflect selection effect for ‘ambition’

• The combination of Ambition + time in core region seems to be crucial to ‘moving on up’– Not either on their own

• At least consistent with sketched ‘theory’