Does changing your job leave you better off? A study of labour mobility in Australia, 2002 to 2008

The dynamics of labour mobility have been a matter of long-standing interest to researchers and policy-makers. It is a tricky subject, one that is afflicted by limitations in the information available and which can also pose dilemmas for social policy-makers who are concerned both to ensure a well-functioning labour market and people's welfare.

This paper is one of three commissioned by the National Centre for Vocational Education Research (NCVER) at the request of the Department of Education, Employment and Workplace Relations to tease out some of the issues connected to mobility in the Australian workforce. The related papers are:

• The mobile worker: concepts, issues, implications by Richard Sweet
• Understanding and improving labour mobility by John Buchanan, Susanna Baldwin and Sally Wright.

In this paper, using data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, Ian Watson explores the extent and consequences of labour market movement and the characteristics of people who change jobs. The analysis concentrates on adult employees who change their employer in the course of a year.

While around 17% of workers changed their jobs in 2008, most of those movements were within local labour markets. Interestingly, on average, workers who changed jobs were not better off financially, although they were better off in terms of happiness and job quality. Both the opportunity to acquire new skills and the use of existing skills are enhanced by changing jobs.

Watson argues, on the basis that wages are not a major element of labour mobility, that the labour market needs to be treated differently from simple commodity markets.

Tom Karmel
Managing Director, NCVER

What is the extent of labour mobility in Australia? Why do workers change jobs? How far do workers move when they change jobs? What are the characteristics of those workers who do change jobs and how do they differ from those who don't? Finally, are workers better off after changing their job? These are the core questions which this report addresses.

We are fortunate in Australia to have a unique longitudinal dataset—the Household, Income and Labour Dynamics in Australia (HILDA) Survey—which is ideal for tracking changes over time and which provides a wealth of labour market information.¹ In following adult employees who changed their jobs from one year to the next, this survey can be used to answer these questions.

The 'Overview' chapter uses descriptive statistics to show that about 15–17% of workers change their jobs from one year to the next. Most of these workers change jobs because they are dissatisfied with their current job, or because they want a better job. Involuntary job loss—either through retrenchment or the temporary nature of the job—declined considerably over the period 2002–2008. When workers do change jobs, they are most likely to stay in the same residence or, if they do move, to stay in the same local labour market. Only a small proportion actually move interstate or move any considerable distance.

The 'Characteristics of job changers' chapter uses regression modelling to explore how job changers differ from those who stay put. The most distinctive characteristic of job changers is their age: changing jobs is very much the province of the young. Workers aged under 30 years have almost twice the probability of changing jobs as those in their 50s and upwards. Another demographic feature of job changers is their geographical location: workers living in the Northern Territory, the Australian Capital Territory and Perth are much more likely to change jobs, while those in Tasmania are much less likely.

Among the labour market characteristics, the most distinctive feature is the role of labour market insecurity. Those workers employed as casuals are far more likely to change jobs than those not so employed. Those workers with a prior history of unemployment, or who had spent time outside the labour market, are also more likely to change jobs. While occupational tenure does not count for much, job tenure certainly does. Those workers who have been in jobs for long periods are much less likely to change their job.

Industries with high levels of job changing include accommodation, cafes and restaurants, construction and transport. Those with low levels include education, information services and health and community services. Among female workers there appears to be a sharp distinction between higher-skilled occupations—where job changing is more common—and lower-skilled occupations—where job changing is less common. Male workers do not follow this pattern.

Workers employed in large organisations—those with 500 or more employees—are much less likely to change jobs. Those in the smallest workplaces—those with under 20 employees—are much more likely to change jobs. Union membership and access to training appear to be only weakly associated with job changing.

The report also makes use of some unique personality and attitudinal data items which the Household, Income and Labour Dynamics in Australia Survey dataset provided. Analysis of these shows that 'extroverts' are much more likely to change jobs than are most other personality types. Workers who are dissatisfied with the nature of their job and with the level of job security are much more likely to change jobs. These factors are more important than satisfaction with the income from that job.

The chapter, 'The consequences of changing jobs', makes use of a matching estimators approach to provide a causal analysis of this issue. By regarding job changing as a treatment, and comparing job changers with a control group—those who don't change their jobs—it is possible to analyse the impact of job changing on earnings, satisfaction and skills. This analysis shows that job changing does not lead, on average, to an increase in earnings. This applies to both hourly rates of pay and annual earnings. On the other hand, job changing does lead, on average, to greater levels of job satisfaction. This applies to all areas—pay, hours, flexibility and the work itself—except for the issue of job security. This is largely unaffected by changing jobs, suggesting that those workers who are marginalised in the labour market, such as those working in short-term casual jobs, may be caught up in patterns of job churning, in which finding a new job does not lead to greater job security.

Finally, changing jobs has good outcomes in terms of productivity. Both the opportunity to acquire new skills and the use of existing skills are enhanced by changing jobs.

¹ This report uses unit record data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Project was initiated and is funded by the Australian Government Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA) and is managed by the Melbourne Institute of Applied Economic and Social Research (MIAESR). The findings and views reported in this report, however, are those of the author and should not be attributed to either FaHCSIA or the MIAESR.