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Geographic labour mobility

Research report

Released 06 / 05 / 2014

This report assesses geographic labour mobility within Australia and its role in a well-functioning labour market.

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  • Key points
  • Media release
  • Contents
  • Geographic labour mobility is an important element of a well-functioning labour market. By improving matches between employers and workers, geographic labour mobility can contribute to economic efficiency and community wellbeing.
  • Advances in transport and communication technologies have broadened the scope of geographic labour mobility. This mobility can take the form of residential moves, long-distance commuting and telecommuting.
  • Geographic labour mobility has been an important mechanism for adjusting to the demographic, structural and technological forces shaping the Australian economy. It has accommodated differences in the pace of economic activity across Australia and enabled wealth to be more widely distributed across the country.
  • Labour appears to be responding to market signals and moving to areas with better employment and income prospects. These movements, together with the increase in long-distance commuting and temporary immigration, have assisted in meeting labour demand in many parts of the country.
  • Gravity (a region's size), distance and economic opportunities are the main determinants of geographic labour mobility at an aggregate level.
  • At the individual level, personal and locational factors interact to influence whether and where people move. Life events and family circumstances appear to be the most important factors in such decisions, but factors related to housing, employment, local infrastructure and a person's level of education also play a prominent role.
  • Areas of high unemployment and disadvantage vary in their mobility - some have high rates of mobility, while others have low rates of mobility.
  • While geographic labour mobility is assisting labour market adjustment, high unemployment is persisting in some regions, and there is room for improvement.
  • There are no simple levers to affect geographic labour mobility. Many policies aiming to influence where people live and work in regional and remote areas have had limited effectiveness. Policies will be more effective if they are highly targeted.
  • In addition to geographic labour mobility, a flexible, accessible and quality education and training system is important for meeting Australia's continually changing workforce and employment needs.
  • The negative consequences of some poorly designed policies, such as taxation, housing and occupational licensing, include reduced geographic labour mobility. Reform in these areas would lessen impediments to geographic labour mobility, and also have broader benefits.
    • The community has been poorly served by the lack of progress in occupational licencing and action should be expedited.
  • Improved access to administrative data would assist better understanding of geographic labour mobility in Australia.

Geographic labour mobility helping the economy

Geographic labour mobility is helping the economy adjust to major structural change, according to a research report released by the Productivity Commission. Generally people are moving to areas with better employment and income prospects, and employers are using a range of sources to attract employees with the required skills.

In addition to permanent relocation, alternate forms of mobility are offering considerable flexibility in the labour market. The increased use of fly-in, fly-out (FIFO) practices and temporary immigration have been critical to meeting peaks in labour demand in many parts of the country.

The study contributes to understanding of why people move. Commissioner Alison McClelland said: "For individuals, life events and family circumstances appear to be the most important factors in decisions whether to relocate for work. Factors related to housing, employment, local infrastructure and a person's level of education also play a prominent role."

At an aggregate level, a region's size, distance from other regions, and economic opportunities are the main determinants of geographic labour mobility.

While the study found some problems, particularly the persistence of high unemployment in some regions, there are no simple levers that governments can use to influence where people live and work. The Commission's recommendations are mostly aimed at broader structural reform, which will also assist employment mobility: alteration of the tax mix as it affects housing; improving the efficiency of land-use planning and land release; reviewing rent assistance and the supply of affordable rental properties available to people on low incomes; improving programs that assist unemployed people to find employment in other locations; and, restoring failing efforts to reduce occupational licencing barriers to mobility.

There are gaps in the understanding and measurement of geographic mobility, particularly of temporary or 'service populations'. The Commission finds that more can be done in this area, in particular improving access to administrative data so that Agency holdings are available for analysis.

  • Preliminaries
    • Cover, Copyright and publication detail, Foreword, Terms of reference, Contents, Acknowledgments and Abbreviations
  • Overview
  • Recommendations and findings
  • Chapter 1 Introduction
    • 1.1 What the Commission has been asked to do
    • 1.2 The scope of the study
    • 1.3 The Commission's approach
    • 1.4 Conduct of the study
  • Chapter 2 Conceptual framework
    • 2.1 How do firms decide where to locate their activities?
    • 2.2 How do people decide where to live and work?
    • 2.3 How does efficient job matching take place?
  • Chapter 3 Why is geographic labour mobility important?
    • 3.1 Economic efficiency and wellbeing
    • 3.2 Impacts of geographic labour mobility
  • Chapter 4 Labour demand in a changing economy
    • 4.1 The Australian economy is changing
    • 4.2 Recent trends in the industrial composition of labour demand
    • 4.3 Industry composition and types of employment
    • 4.4 The location of jobs in Australia
    • 4.5 What does the future hold?
  • Chapter 5 Residential mobility
    • 5.1 Residential mobility in Australia
    • 5.2 Who moves?
    • 5.3 Where are people moving?
    • 5.4 Geographic labour mobility overseas
  • Chapter 6 Commuting
    • 6.1 Long distance commuting
    • 6.2 Intra- and intercity commuting
    • 6.3 Telecommuting
  • Chapter 7 Mobility and unemployment
    • 7.1 How mobile are unemployed people?
    • 7.2 Patterns of moves by unemployed people
    • 7.3 Mobility in regions of high unemployment
    • 7.4 Does moving improve employment outcomes?
    • 7.5 Improving prospects for unemployed people
  • Chapter 8 Impediments and enablers
    • 8.1 Personal factors
    • 8.2 Locational factors
    • 8.3 Transitional factors
    • 8.4 Which impediments and enablers are the most significant?
  • Chapter 9 Employer strategies
    • 9.1 Strategies that affect geographic labour mobility
    • 9.2 Strategies to mitigate any negative effects of geographic labour mobility
    • 9.3 Have these strategies been effective?
  • Chapter 10 Government strategies
    • 10.1 Internal migration policies
    • 10.2 Structural adjustment policies
    • 10.3 Regional development policies
    • 10.4 Alternative and complementary policies
  • Chapter 11 Is there a problem?
    • 11.1 Are labour market signals working?
    • 11.2 Are there any distortions?
    • 11.3 Are there serious impacts on community wellbeing?
    • 11.4 Summary: what have we found so far?
  • Chapter 12 Broader policy settings
    • 12.1 National policy issues
    • 12.2 Cross jurisdictional policy issues
    • 12.3 Managing the effects of geographic labour mobility
    • 12.4 The need for better data and policy evaluation
  • Appendix A Public consultation
  • Appendix B Measuring geographic labour mobility
  • Appendix C Geographic settlement in Australia
  • Appendix D Econometric modelling of the decision to migrate
  • Appendix E Econometric modelling of regional migration
  • References

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