Economic Development News & Insight

logo-horizontal

Job Loss and Residential Mobility

/ April 28, 2017

moving home

The recent economic downturn [2008-2009] magnified a routine occurrence in the Canadian labour market: job loss resulting from an employer downsizing, moving, or going out of business.” In the 10-month period between October 2008 and July 2009 Canada lost 431,000 jobs, or 2.5% of the workforce and unemployment was as high as 9%. Job loss came from downsizing, business closures and moves. “Involuntary job loss” even in good times can range from 6-7%.

A recent article published in Canadian Public Policy/Analyse de politiques (March 2017) explores correlations of those who have involuntary job loss and residential mobility.* This study helps fill a void into the research about job loss and “geographic mobility”. Moving is costly, takes time away from job search, and causes stress for those adapting to new employment, “housing or surroundings.”

Negative effects of job loss can include reduction in income, decline in health, interruptions to education, and even “earnings attainment of one’s children”. Job loss can result in earnings dropping 10-35% which can have an impact for upwards of five years. As a result, consumption of a wide range of consumer products drops and, in particular, housing. This can mean moving to a cheaper home or apartment, or migration, to secure employment and reduce the economic impact of job loss.

Little is known about the “mobility consequences of involuntary job loss” nor of the neighbourhoods to which people move as a result. Understanding the phenomenon is important to understanding social and economic costs and to inform public policy such as income tax and employment insurance. The study used data from the Canadian Survey of Labour and Income Dynamics (SLID) for 1996 to 2010 period, which included those aged 15 years and older.

What did the study find?

● Those who lost jobs were more likely to move than those who had job stability

● Job loss is not “concentrated among individuals in more mobile life stages”

● Job loss “precipitates mobility among workers who are otherwise less mobile” (lower educated, workers in natural resource and manufacturing jobs)

● Those who experience job loss more likely to be renters; renters, generally, are 3- times more likely to move

● Job loss “triggers both short- and long-distance” moves

● Job loss is a “strong predictor” of moving regardless of “life cycle stage or economic resources”

● Job loss increases the probability “of moving to a high-deprivation area from a lower deprivation area”

● For those living in affluent neighbourhoods, job loss may mean moving to a “non- affluent” area

● For renters, who are are already more likely to experience downward mobility, education and income may provide some amelioration

● A “strong predictor” of entry into high-deprivation areas is visible minority status

The study offers an important look into the correlation of job loss and mobility and migration, until now, a neglected area of research. The author notes that the bulk of moves were short-distance, suggesting these are to reduce housing costs and to reduce commute times. And, job loss does mean that those who have lost employment, through no fault of their own, have a higher probability of downward mobility (moves to higher deprivation areas) and this is especially true for renters.

Although exploring policy associated with job loss was not a focus of the study, the author questions whether the regionalization of the Employment Insurance (EI) programme “disincentivizes longer distance migration out of high employment areas” which have higher EI benefits. Although people do make long-distance moves right after job loss, would migration rates be different under a policy of higher benefit amounts? Findings suggest that, because mobility is associated with “downward transitions in neighbourhood attainment”, it may lead to a “cycle of cumulative disadvantages for some workers”.

For many Canadians, involuntary job loss is part of the Canadian life course and has a clear impact on mobility and the outcomes of moves.”

The research paper can be found Canadian Economics Association Website

*”Leaving work, leaving home: Job loss and socio-geographic mobility in Canada” (doi:10.3138/cpp.2016-014)

David I.M. Clark

DMCmetrix.com

Comments are closed.