Occupational mobility in Australia a quantitative approach

Empirical evidence suggests that occupational mobility accounts for a large part of the annual redistribution of the Australian workforce: available survey data reveal that while immigrants and entrants from the education sector respectively add of the order of one per cent and three percent of employed people change their occupations within the same time period. The major aim of this study is to formulate and estimate a model to explain occupational mobility in Australia. Both the demand and supply sides of the labour market are affected by and affect this process. Any attempt to capture the factors determinng observed occupation changes, therefore, must be from a structural point of view. Currently the only information available on movements between occupations is from two surveys by the Australian Bureau of Statistics which yeild data for the twelve month periods prior to November 1972 and December 1975. Analysis consequently must rely largely on cross-sectional evidence. A brief investigation of the demographic characteristics of the data reveals that broadly similar patterns pertain in the behaviour of Australian job changers and that of their overseas counter-parts. The main hypotheses advanced in the development of the theoretical model are: (i) that occupational mobility varies with excess demand (or supply in the aggregate labour market; (ii) that segmentation occurs within individual markets for specific occupations; and (iii) that net labour mobility between occupations is responsive to changes in relative occupational wage rates after adjustment for differential risks of unemployment. The final form of the model to be estimated can be reduced to a recursive simultaneous system in 39 parameters. The most important of these is the elasticity of transformation between the various source/destination occupations. In this study the limited data base available leaves no alternative but to treat elasticity as a single constant for all pairs of occupations. A large part of this thesis is devoted to the development of a data base to enable estimation of the proposed model. The empirical results support the hypothesis that net mobility is a function of changes in relative occupational certainty equivalent wage rates. Further, the statistical properties of the estimates suggest that the structural approach can be highly successful in comparison to previous, less carefully specified, reduces form studies in this area.