Education & Mobility. CEE DP 100

Regional labour mobility has long been viewed as a crucial component in the functioning of the labour markets of different countries. Indeed, the study of regional labour mobility has moved towards the top of the research agenda, especially in Europe, where regional unemployment differentials have been persistently larger than in the United States. Individuals know that the attainment of a higher level of education tends to open up new opportunities in the labour market. Thus, if labour markets for skilled workers have a national dimension, a higher level of education should increase the likelihood of mobility, especially if the worker lives in a region with a higher unemployment rate. In this paper, the authors explore the role of compulsory education in facilitating mobility. They study an educational reform which increased the years of compulsory schooling in Norway by two years. From a research modelling perspective, this reform is particularly attractive for at least three main reasons. Firstly, the timing of the reform is geographically dispersed in a quasi-random fashion, and secondly it increased the minimum years of schooling by a large amount. This is why the authors think it offers a good opportunity for credible inference in an instrumental variable framework. Thirdly, it has external validity, since reforms of this type were carried out in many other European countries after the Second World War. Using data for Norwegian birth cohorts from 1947 to 1958, matched to data on their parental background and different compulsory schooling regimes, the authors estimate statistical models treating the following regional mobility outcomes as a function of education; the annual propensity to move to another county; the total number of regional migrations over a 17 year period; and the probability of moving to an urban area. In addition, the authors consider the labour market effects of education by studying the causal impact of education on employment and earnings. The authors' results suggest clear positive effects of education in term of mobility, and that a substantial proportion of the observed unconditional covariance between education and mobility is causal. The magnitudes of the estimates show that one year of education increases the annual mobility rates by 15 percent from a low base rate of 1% per year for the sample used in this study. The extent to which this rate of increase can be applied to the general population remains unclear but, in terms of policy, it is important to make the point that the segment of the population with lowest educational attainment is arguably the most interesting one. This is certainly the case when commentators highlight labour market problems by appealing to problems of low mobility amongst the less educated or skilled. There are several possible channels via which education levels can affect individual's location choices. The authors test some of these as well as undertake several robustness tests. Their results suggest these patterns are causal for the groups with lowest levels of educational attainment. Importantly, this implies that educational interventions that increase years of schooling could help bridge some of the differences in the dynamism and labour market efficiency between countries characterised by differing rates of labour mobility. Additional tables are appended. (Contains 11 figures, 20 tables and 20 footnotes.)