1. Willingness-to-move: a choice modelling approach Presented by Aaron Nicholas, Deakin Graduate School of Business & CEET 15 th Annual National CEET Conference Melbourne Friday, 28 October 2011

2. Geographic Labour Mobility (GLM) Why should we be interested in GLM? 1.In some areas there could be oversupply (unemployment) 2.In other areas, there could be a shortage of labour Their coexistence, especially within any country, suggests that there is a role for policy (in terms of productivity), for encouraging movement.

3. Changes in the Australian Internet Listed Vacancies There has been a 0.6% decline in overall vacancies. There has been a six month consecutive fall for all states/territories. Despite this, 21 out of 38 regional/rural areas reported increases in vacancy listings.

4. Growth in Regional Vacancies

5. Current incentives Connecting People with Jobs Suggestions of tax exemptions (WA; ACCI report 2007) European Globalisation Adjustment Fund (2007) offered ‘mobility allowances’.

6. Some questions for GLM 1. How much should we pay, if at all? 2. Who are the most likely to move? 3. What kind of contracts (fly-in fly out, versus permanent settlement) are more attractive?

7. How much should we pay, if at all? While studies have looked at the probability of moving, it is not clear what is the minimum payment required to effect a move. While we can estimate through cross- sectional regressions, the effect of an increase on wages on the probability of moving, such estimates are biased.

8. Individual A Starts with $2000/week Individual B Starts with $2000/week

9. Individual A Starts with $2000/week Individual B Starts with $2000/week Individual A Moves to a job with $3000/week Individual B Stays with his job

10. Why sort of a person would consider moving? Commonly, we attribute this to individual-specific characteristics. However it could be: 1. lack of information about job opportunities 2. demand-side effects: for example, are educated people more mobile because their skills are more in demand, rather than they being more willing to move? Additionally, how do we make predictions on the effects of changes in contract offers, for contracts that are rare or don’t currently exist?

11. Willingness-to-move A ‘pure’ measure of the WTM is a supply- side measure unadulterated by demand-side effects. That is, WTM is not a function of current labour demand conditions. Two individuals could have the same WTM, but one may be more skilled, and therefore more likely to be observed moving.

12. A Better Measure? Discrete Choice Experiments. A stated choice survey method that has been employed in willingness-to-pay studies, primarily for public and non-monetary goods.

13. How does it work? We can control for standard demographics and economic characteristics of the individual. But in addition we can construct hypothetical employment situations and ask individuals if they are willing to move and accept said employment. Therefore we can move away from simply looking at individual characteristics, to focusing on the role of information, and contract details.

14. Example Stay with your current situation Accept a job at location X that uses skills from your recent qualification. This job pays an annual wage Y and has a Z working- hours week. In addition, the employer provides the following Q community benefits.

15. By presenting numerous pairs of such scenarios, we can more precisely estimate the influence of variables such as X, Y, Z and Q on the willingness-to-move (WTM) of individuals.

16. Example Accept a job at Gladstone that uses skills from your recent qualification. This job pays an annual wage $110000 and has a 35 working-hours week. In addition, the contract is a permanent on- going position. Accept a job at Gladstone that uses skills from your recent qualification. This job pays an annual wage $120000 and has a 40 working-hours week. In addition, the contract is a 2/1 fly-in, fly-out.

17. Some questions for GLM 1. How much should we pay, if at all? 2. Who are the most likely to move? 3. What kind of contracts (fly-in fly out, versus permanent settlement) are more attractive?

18. Our sample Focused on urban/regional areas with high unemployment. Will measure their willingness-to-move to specific areas (such as Gladstone or Karratha).