Get A Move On? The decline in regional job-to-job moves and its impact on productivity and pay

15 August 2017

This briefing note looks at how economically-driven internal migration has changed in the UK over the past two decades. There has been a significant decline in the share of people moving region and employer since it reached a high at the turn of the millennium, partly this is cyclical, but it is also the result of structural shifts in the British population and labour market. We investigate which groups have led this decline and explore some of the factors that may be responsible. With one eye to the future we also look at the contribution that immigration has made to internal migration and touch upon what effect any further declines in net migration could have on the dynamism of the UK labour market.

Key findings

The share of the working-age population moving region and employer has fallen by 25 per cent since 2001, around 0.6 per cent of the population (140,000 people) moved region for work last year.
This decline has occurred at a time when – all else being equal – population changes should have increased mobility. The share of the population renting their home, the share who are graduates and the share who are migrants have all increased. All three groups have traditionally been relatively mobile, but all are less mobile than they were in the past.
The most significant decline has been for younger graduates. 1.8 per cent of graduates moved region and employer in 2001, whereas only 1 per cent did so last year; graduates under 35 were 5.7 times more likely to move than non-graduates in the late 1990s, now they are just 3 times as likely.
At the same time that internal migration has declined the UK has become more reliant on migrants to provide this mobility. Migrants accounted for 8 per cent of regional job-to-job moves in 1995, but now account for 24 per cent. With further falls in net migration likely in future the government needs to be alive to what impact this could have on the UK labour market’s ability to allocate labour to where it is most needed.
This decline in regional job-to-job moves has occurred at a time when differences in employment rates between regions of the UK have significantly narrowed. In this sense the fall in internal migration may just reflect the fact that it is easier for people to find jobs nearer to home. However, it has also occurred at a time when differences in productivity between UK regions have increased suggesting that the decline in mobility may be contributing to poor productivity growth as workers fail to find jobs that best suit their talents.
The decline may also be contributing to stagnant wage growth as the typical earner would have been £2,000 better off moving region and job than someone staying with the same employer, they would have also been £320 better off than someone who moved jobs but stayed in the same region.
Previously policy makers have focused on the propensity for regional job mobility to reduce unemployment, however the evidence suggests that only 10 per cent of regional moves for work are by the previously unemployed or inactive (a proportion that has remained stable over time). This, and the fact that declining mobility appears to be putting downward pressure on productivity, suggests that increasingly a key labour market challenge is matching people to jobs that best suit their talents.

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