Occupational and regional mobility as substitutes: Influencing factors and consequences for wage inequality

• In Event: 151 - Regular Session. Internal Migration

Abstract

Mobility of labor is central for the matching process of employees and jobs and thus influences productivity and individual wage trajectories. In this context, regional as well as occupational mobility are major sources for stratification. We argue that both types of mobility are not independent from each other but rather constitute substitutes when aiming to improve the labor market position or trying to evade unemployment. Especially occupational characteristics alter cost factors for individual mobility and thus push employees either towards jobs in other labor market regions or into other occupations. As regional mobility yields higher returns than changes of the occupation, the substitutionary function constitutes a major mechanism that forms stratification and inequality on the labor market. Using linked retrospective life-course data for Germany (ALWA-ADIAB) and Fine and Gray models for competing risks, we show that occupational characteristics such as occupation-specific human capital, skill-demands and occupational closure simultaneously affect both regional and occupational mobility, revealing their substitutionary function. Using Fixed-Effects wage regressions, we are then able to show that these types of mobility indeed lead to unequal outcomes. We stress the point that the interrelationship is a major factor that influences inequalities on the labor market and should be considered when analyzing mobility effects.

Authors

• Malte Reichelt, Institute for Employment Research

• Martin Abraham, University of Nuremberg-Erlangen