Labour mobility is how easily workers can change jobs (occupational) or move to work elsewhere (geographical).
Occupational mobility is how easily workers can move from one type of job to another. It is low when the new job needs skills the worker does not have. Training courses make it higher.
Geographical mobility is how easily workers can move to a job in another place. It is low when homes in the new area cost a lot, when moving is costly, or when family ties keep people where they are. Better transport and cheaper homes make it higher.
High mobility helps the economy. Workers move from shrinking industries to growing ones. Fewer people are left without work, and output rises.
Low mobility has costs. People stay out of work even when there are jobs elsewhere. Firms struggle to fill their vacancies, and growth slows.
- Occupational mobility
- Ease of changing type of job.
- Geographical mobility
- Ease of moving location for work.
- Benefit of high mobility
- Less structural unemployment; resources move to growing industries.
Worked example: Retraining after automation
Suppose a bank replaces many tellers with digital services.
- Problem: tellers lose their jobs, but their skills do not suit the jobs that are growing, such as data analysis.
- Low occupational mobility: without new skills, they may stay unemployed.
- Policy: subsidised courses, such as those under SkillsFuture, help them retrain.
- Consequence: higher mobility lets them move into growing industries, reducing structural unemployment.
Watch out for this
Geographical mobility is about changing occupation.
Geographical mobility is about changing location for work. Occupational mobility is about changing type of job.
Check your understanding
A government gives grants for adults to retrain in new skills. Which kind of mobility rises?
- Occupational mobility
- Geographical mobility
- Neither, because training only helps firms