Worklessness and Deprived Communities: an academic response Ian Gordon Geography Department, London School of Economics IPPR North seminar, Middlesbrough, February 2005

Aims – try to talk about Processes (re)producing concentrated unemployment What we do(nt) know about neighbourhood effects Generally worthwhile policies for all areas (and generally bad bets) Need for caution in analysis of local data / effects

Structure How (local) labour markets function Area Effects ? Targeting (pros and cons) Reproducing Concentrations of U/E Generally Worthwhile Elements of Policy

A Starting Point: perspectives on LLMs Spatial Labour Markets = real (sets of sub-) markets tho more open to supply adjustments than expected, because of vacancy chains –oddness of labour as commodity means: selection & control problems more job than price competition (Thurow) prejudice and bumping down conversion of demand-deficient into structural U/E

The Neighbourhood Effects Issue Two kinds of area (as distinct from person/family) effect: –Pressure of demand for labour operating at levels broader than TTWAs –e.g. extended London region –Social mix Via peer/role model, information, stigmatisation, infrastructure/services Operating at relatively local level (streets/quarters) Real problems in identification –Bias toward over-estimation, even if we try to be careful

What do(nt) We Know Pretty good evidence of significant area/school effects on children –Still weak relative to individual/family effects, –not nec. strongest at bottom end or related to general deprivation (e.g. lone parents) Very plausible evidence about information network effects –Worse access to informal inf. About (stable) jobs if living in streets with high U/E And reasonable evidence that exit rates from poverty are significantly lower in areas with highest U/E (worst 5%) –But controlling adequately for (strong) residential sorting is still a real problem & likely to bias conclusions –And indiv/hhld chars still much more significant Some good new negative findings from Simon Burgess et al (Bristol) –No (negative) effects of area status on personal income changes over 5 or 10 years

TARGETING – Pros and Cons Case for spatial / social targeting (of job creation or training) –Imperfect connection of sub-labour markets + exclusionary processes Bigger bang for (targeted) buck – less deadwood / inflation BUT –Cause of problems generally in functioning of the core of the LM (e.g. regional PoD and bumping down) –Cannot isolate the margins: targeting a leaky bucket always collateral damage – on similarly deserving groups via displacement of jobs or others in congested entry areas (move on up the car) –Encourages under-estimate of required effort / resources –Diminishing returns to concentrated action (on serious scale) + targeted margins may be inefficient / unnecessarily costly sites for action

Looking beyond the Labour Market processes reproducing concentrated unemployment All the links deserve attention

Some Generally Worthwhile Policies Promote movement up the car – upward mobility for all – for productivity and employability Work harder at equal opportunities – in rel to class/age as well as race/gender (again for both goals) Collaborate with neighbours to secure full employment PoD across regional labour market (as key to efficient LM) Enhance educational performance at the levels required for access to (locally recruited) middle range jobs – and stable opportunities more generally Promote collaboration and quality raising initiatives among employers in high turnover activities (e.g. hotels) Be more willing to protect local jobs (in bad times) than to chase new ones