Migration and the North-South Divide

Some parts of the UK have persistently higher unemployment rates than others - Figure 1 in the Case for Support shows the unemployment rate in 2011 and 1981 in the largest cities. Although some parts of the South perform poorly and some parts of the North perform well, it is remarkable how marked is the 'North-South' divide in the level and persistence of unemployment. It is often argued that migration is the main force that would be expected to equalize economic opportunity across areas - with people moving from disadvantaged to more advantaged areas thus reducing the competition for jobs in high unemployment areas and increasing it in low unemployment areas. According to this view, the persistence in unemployment is primarily caused by a weak migration response and that the solution to the North-South divide is policies to increase migration rates. But in fact, the migration response in the UK is quite strong -Figure 2 in the Case for Support shows that areas with a poorly performing labour market in 1981 had significantly lower subsequent population growth than areas with relatively low unemployment in 1981. Putting these two pieces of information based on Figures 1 and 2 together makes it clear that migration is failing to equalize economic opportunity across areas and we need a better understanding of why. This project aims to do just that.

First, it may be that migration alters the mix of the population in the area moved out of and not in a way that improves the economic prospects of those who are left behind. For example, it may be that more educated individuals are more mobile geographically so that migration from deprived areas acts to depress the skill base there. Our project will use Understanding Society, its predecessor (the British Household Panel Survey) and the Birth Cohort Studies to investigate how individual migration decisions respond to economic opportunity and how this responsiveness varies across different types of individuals. Using the Birth Cohort Studies with their very detailed information on both educational attainment and on non-cognitive skills, we will be able to provide much better evidence of the types of people who move in response to economic opportunity e.g. are more 'dynamic' individuals more mobile as is sometimes claimed?

Secondly, it may be that whilst individuals facing economic hardship are more likely to move out of an area, they may nevertheless be compelled to return to the support of their wider family who may live in an area with no greater economic opportunity than the one they moved out of. Using our data sets one can also investigate the destinations of those who move because of economic shocks.

Finally, the project will also help us to understand the channels by which economic opportunity affects migration decisions. Much discussion assumes it is directly through the labour market. But it is possible that economic shocks to an area cause a deterioration in non-economic aspects of the neighbourhood e.g. because of a rise in crime or a fall in the level of amenities offered. Using the reasons for moving and questions about satisfaction with neighbourhood in Understanding Society and the BHPS the project will disentangle the economic and non-economic channels.

The project will lead to academic research papers to publish in leading peer-reviewed journals. But we also hope to influence the debate around regional policy and how regional inequalities can be reduced. We will write accessible summaries for more popular outlets such as the CEP's Centrepiece magazine and the LSE Public Policy blogs. We will work with our non-academic partners to disseminate the research widely across the country. We will engage with stakeholders through our partners Manchester New Economy and RBS and use the conduit of the What Works Centre, (a partnership between the LSE, government departments, ARUP and the Centre for Cities) as a vehicle for disemmination.

Our proposed research will have both scientific and policy impacts.

We will ensure scientific impact in the following ways:

1. Our methodology for investigating the impact of economic shocks on migration will be an improvement over much of the existing literature. Most of that literature treats the level of economic opportunity in an area (measured, perhaps, by the unemployment rate) as exogenous. We will seek to use an instrumental variable approach (detailed in the case for support) to provide causal estimates, something rare in the existing literature.

2. The quality of the data with which we can work allows us to answer interesting and important questions that have been largely intractable to date. For example, using the rich data on cognitive and non-cognitive skills available in the Birth Cohort Studies, we can provide evidence on the types on individuals who are most likely to migrate in response to economic shocks. And using the information in Understanding Society and the BHPS on satisfaction with neighbourhood and the reasons for migration we can investigate the channel by which economic shocks affect migration.

3. Our strategy for ensuring quality in research is to subject it to peer scrutiny within the LSE when we are conducting it e.g. through presenting at the work-in-progress seminars and conferences that are run regularly. And, once complete we will circulate as a Discussion Paper and present at conferences and in seminars outside LSE.

4. By pairing an experienced researcher (Manning) with the early career researcher (Amior) we will augment the UK's base of research skills in the social sciences. We will make our files available to other researchers so they can build on our analysis.

With regional inequalities rising up the political agenda with Osborne's "Northern Powerhouse plans" in his 2015 budget,we have an ideal opportunity to engage non academic audiences, in particular regional policymakers, economic development practitioners and local political leaders with the new evidence from our work on the role of migration in mitigating or exaggerating regional inequalities in economic opportunity. We will be helped in this by partnering with Manchester New Economy and the Royal Bank of Scotland and gaining access to their extensive regional networks.

We will ensure policy impact in the following ways:

1. We will produce the results of our research in formats that are accessible and understandable to interested parties outside academia. The channels we will use for this include outlets like CEP's Centrepiece magazine, whose articles are always press-released, and the LSE public policy blogs. Any discussion papers will have non-technical executive summaries.

2. We will work with our non-academic partners to reach out to those interested in and formulating regional policy in the UK and, importantly, not just in London. Workshops are planned towards the beginning and end of the project and a non-technical report will be produced and distributed.

2. We will also take pro-active steps to engage with those interested in and formulating regional policy in the UK including thinktanks like the Centre for Cities and policy-makers. The interested policy-makers are likely to be in both Whitehall and perhaps more importantly, given the focus on regional inequalities, in the devolved administrations for whom we will organise workshops. The main conduit for this will be the What Works Centre, a partnership between the LSE, governments departments, ARUP and the Centre for Cities with whom we will organise further dissemination and workshops.

3. Ultimately we aspire to be able to influence regional policy in the UK. To this end we will use our research findings to assess the likely impact of different policies designed to alleviate regional inequalities. And, ideally, to suggest policies that might work and improve the quality of life in many parts of the UK.