Occupational Choice from a spatial perspective

Background and Objective

It is the project's purpose to explain how occupational choice, entrepreneurial activities and occupational mobility differ between regions. The project further wants to identify possible determinants of these differences. Based on the results, a conclusion will be derived about the interrelation between occupational choice and regional development.

Approach

In the first phase of the project a microeconomic decision model will be developed, which explains occupational choice from a spatial perspective.

The second, empirical part is based on the econometric analysis of secondary statistics.  Therefore aggregate data on the level of qualification, the composition of industries, the fluctuation of employees, apprenticeship, the size of firms and entrepreneurial activities are used. We test our microeconomic decision model with micro data of individual persons from the socio-economic panel (SOEP) and the employment data from the IAB.

Our Research Questions

The project asks, how local conditions affect individuals' occupational choice and what exactly the determinants are. Based on these results we discuss the effect of individual decisions on the structural development specifically within peripheral regions with sparse labour markets and how decisions might possibly be influences by different measures.

Results

The project results show that education- and occupation-related decisions, especially in economically disadvantaged families, are guided by the opportunities offered by local labour markets. Due to the higher competitive intensity and diversity of urban education and labour markets, the compatibility between the requirements of training fields and the documented skills of trainees tends to be higher in the metropolitan context than in rural labour markets. People's skills are, in other words, better used in the urban context. In return, individual preferences, for instance with regard to the importance attached to comfort aspects on the one hand and income opportunities on the other, can be better realised in rural labour markets.

The implications for policy thus also depend on the importance attached to the various welfare effects. In general, improving mobility and access to information, especially of disadvantaged households, should be able to contribute to an increase in welfare given the results. Furthermore, actors in regional labour markets should be encouraged to take into account the medium- and long-term effects when making decisions on, for example, the supply and remuneration of training places.

If, for example, relatively low-qualified trainees in thin rural labour markets learn professions in office and administration at the expense of social services, the training and jobs in rural regions in particular could be improved to such an extent that they then also become attractive for qualified prospective employees from urban regions. At the same time, the mobility of rural trainees should be supported in order to increase their options. This would improve both the allocation of skills and the opportunity to realise individual preferences.