Can workers still climb the social ladder as middling jobs become scarce? Evidence from two British cohorts
What is this research about and why did you do it?
Over the last decades several countries have witnessed a decline in mobility that has strengthened the link between individuals’ origins and their socio-economic outcomes. At the same time, the shares in employment of low- and high-paying occupations have increased at the expense of middling occupations, transforming the jobs available. The timing of these trends raises the question of whether the disappearance of middling jobs affected mobility, notably by removing a stepping stone towards high-paying occupations for those from less well-off families. Our work investigates if job polarization has been a cause of the decline in mobility in the UK.
How did you answer this question?
We use data from two British cohorts and first document whether the impact of parental income occurs through entry occupations or if it also operated through occupational upgrading over careers. We then examine the correlation between changes in polarization and in mobility. To do so we exploit the fact that the two cohorts entered the labour market at points in time with very different degrees of employment polarization, as well as regional differences in the increase in polarization. This allows us to use an IV-strategy, where our instrument for regional changes relies on increases in polarization in other countries.
We then ask whether the impact of parental income has increased the most in regions experiencing the greatest increase in polarisation.
What did you find?
We find that transitions across occupations are key to mobility, with about 40% (30%) of those starting in low (middling-paying) occupations experiencing upwards occupational mobility between their mid-20s and their early-40s. Crucially, although on average these probabilities have not changed across cohorts, the impact of parental income on whether individuals transit to better-paying occupations was much higher for the younger cohort – the one more exposed to polarization. We also show that the impact of parental income on occupational outcomes has increased the most in regions experiencing the greatest increases in polarisation, indicating that the disappearance of middling jobs played a role in the observed decline in mobility.
This figure plots the change across cohorts in the probability of experiencing occupational mobility over the individual’s career as a function of parental income. Three types of mobility are considered, downwards, persistence, and upwards. We compute the probability of such mobility for individuals in each of the four possible occupations when young (out-of-work, low-paying, middling, and high-paying occupations) and for each decile of the parental income distribution. A positive (negative) change in the probability indicates that those in the younger cohort are more (less) likely to experience that type of mobility than those in the older cohort.
What implications does this have for the research on wealth concentration or economic inequality?
First, while much of the work on how to increase mobility has focussed on educational opportunities, our work highlights the importance of the structure of employment. Providing young individuals with better skills may not lead to income gains if suitable jobs are not available. Second, analyses of job polarization have highlighted its impact on the current distribution of earnings; we argue that it also affects the extent of social mobility.
What are the next steps in your agenda?
Our findings highlight the importance of middling jobs and we intend to examine what makes them so important for mobility. Is it because they entail a large amount of on-the-job learning? Or do they reveal more information about the innate ability of workers than low-paying jobs?
This paper can be cited as follows: García-Peñalosa, C., Petit, F., and van Ypersele, T. (2023). 'Can workers still climb the social ladder as middling jobs become scarce? Evidence from two British cohorts.' CESifo Working Paper No. 10337.