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8.4  Mobility in the OECD (continued)

A more detailed look at mobility in France is presented in Bazen (2001). He uses labour force survey data to examine wage mobility for the whole French labour force. He finds that:

  • Earnings mobility is higher for younger workers.
  • There has been some fall in mobility between 1990 and 1997.
  • Between 1995 and 1996, for workers aged under 30, 43% of first decile workers and 35% of second decile workers moved to a higher decile.
  • Over the two year period 1995-7, the comparable figures were 50 and 40%.
  • Workers over 30 had a little less mobility than did the younger workers.
  • Despite their higher mobility, in the mid-1990s nearly half of young people in the first decile of wages were still there two years later.

8.5  Welfare to low wage jobs

Lane and Stevens (2001) report a detailed look at the prospects for economic independence provided to welfare recipients by low wage jobs. About half of welfare recipients (aged 18-65) in Baltimore found a job of any sort between July 1990 and September 1996. Only 18% of the total were able to obtain and hold jobs that paid sufficient to enable them to leave welfare benefits for any period between 1990-96. Those who did get work generally had short tenure, averaging 3 jobs in the period. Only 2,432 of the 24,631 jobs offered to (and taken by) welfare recipients, enabled the recipients to leave welfare, and only 4,662 lasted more than four quarters. Jobs that enabled recipients to leave welfare were more likely to be in public administration, health services and social services, and to be in growing rather than shrinking firms. If anything, large firms were less likely to provide longer lasting jobs and those that permit an exit from welfare. Firms that have recent experience of hiring welfare recipients have better matches, in terms of duration.

Overall, the conclusions from this important work are pessimistic about the capacity of low wage jobs to provide good exits from reliance on welfare, among American workers. This supports later evidence that shows the difficulty that sole mothers have in obtaining employment that is more satisfactory than even the very basic benefits available to them under the US welfare system.

8.6  Summary of evidence on mobility

We conclude from this review of the evidence on wage/earnings mobility that:

  • There is considerable variation in the degree of wage mobility across selected OECD countries: policy probably matters.
  • Countries with higher levels of cross-section earnings inequality have lower levels of upward wage mobility.
  • The level of wage mobility among low wage workers is quite low in the UK and the US.
  • Measures of mobility are sensitive to how low wage is defined and whether movement into non-employment or part-time employment is included:
    • The stricter is the definition of low wage, the greater the mobility.
    • The inclusion of movement into non or part-time employment substantially reduces the degree of upward mobility.
  • Quite a large fraction of low wage workers cycle between low wage jobs and no jobs.
  • Mobility is higher, the longer the time interval considered.
  • Youth have higher levels of upward mobility than do older workers.
  • Upward mobility is higher for men than for women, and for more educated workers.
  • Thus, for older, less educated and female workers, low wages are likely to be a trap rather than the first step on the ladder.
  • At least in the US, UK and France, and probably more widely, earnings/wage mobility has fallen substantially over the 1980s and 90s.

Note that the evidence on wage mobility that is cited above is derived from data which end, at the latest, in the mid-1990s. It is clear that mobility fell while (among English-speaking countries at least) inequality of wages rose, in the period from the early 1980s until the early to mid 1990s. We do not know what has happened to mobility in the last few years. The strong labour market in the US in the second half of the 1990s may, for example, have reversed the trend to reducing mobility in that country.

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