Explain the causes of changes in the occupational and geographical mobility of labour, understand how wages are determined, and analyse why wages differ.
1. Factors affecting an individual’s choice of occupation (Syllabus 3.3.1)
When a person decides which occupation to pursue, they consider wage‑related and non‑wage factors. The syllabus lists the following items – they are presented here in the order given by the specification and each is illustrated with a brief IGCSE‑level example.
1.1 Wage‑related factors
Expected earnings – basic salary, overtime, bonuses.
Example: A teenager may choose a fast‑food job because it pays £8 per hour, more than a babysitting job that pays £5 per hour.
Job security and prospects for future pay rises.
Example: A graduate may prefer a graduate‑training scheme that promises a 5 % annual raise.
Working conditions – hours, health & safety, flexibility, location.
Example: A nurse may choose shift work that offers night‑time differentials.
1.2 Non‑wage factors
Education and training – qualifications that make skills transferable.
Example: A person with a Level 3 diploma can move from retail to administration.
Technological change – new technologies create or destroy occupations.
Example: Automation in manufacturing reduces demand for assembly‑line workers but creates demand for robot‑maintenance technicians.
Labour‑market information – easy access to vacancy data, career advice, online portals.
Example: Using a job‑search website reduces the uncertainty of finding a vacancy.
Regulatory environment – licensing, professional qualifications, union rules.
Example: Becoming a solicitor requires a law degree and a training contract.
Age – life‑stage considerations (e.g., school‑leavers vs. retirees).
Example: A 20‑year‑old may take a part‑time job while studying.
Culture – societal norms, gender roles, family expectations.
Example: In some cultures, women are more likely to work in caring occupations.
Personal interests, status and career aspirations.
Example: An individual passionate about the environment may choose a role in renewable‑energy firms.
2. Wage determination (Syllabus 3.3.2)
2.1 Competitive labour‑market model
In a perfectly competitive market the wage is set where the quantity of labour demanded equals the quantity supplied.
Labour‑demand curve (DL) – downward‑sloping; firms hire fewer workers as the wage rises because the cost of production increases.
Labour‑supply curve (SL) – upward‑sloping; more individuals are willing to work as the wage rises because the opportunity cost of leisure falls.
Equilibrium wage (We) and employment (Ee) – the intersection of DL and SL.
Diagram suggestion: A labelled graph showing DL and SL intersecting at We. Use arrows to illustrate upward or downward shifts of each curve.
2.2 Determinants of labour‑demand (demand‑side factors)
Productivity of workers – more productive workers increase the value of marginal product.
Price of the output produced – higher product prices raise the value of marginal product.
Cost of other inputs (capital, raw materials) – lower input costs raise demand for labour.
Technology – labour‑saving technology can shift demand left, while labour‑augmenting technology shifts it right.
Number of firms in the market – entry of new firms increases total labour demand.
2.3 Determinants of labour‑supply (supply‑side factors)
Population size and demographic structure.
Level of education and training – higher qualifications increase the supply of skilled workers.
Alternative employment opportunities (e.g., self‑employment, overseas work).
Taxes, subsidies and welfare benefits – higher taxes on wages can reduce supply; subsidies can increase it.
Non‑monetary considerations – leisure, family responsibilities, health.
2.4 Impact of trade‑union bargaining
Unions negotiate a wage above the market‑determined equilibrium.
This creates a price floor. At the higher wage, the quantity of labour supplied exceeds the quantity demanded, generating unemployment (excess supply).
2.5 Impact of a national minimum wage (NMW)
The NMW is a legally imposed price floor.
If set above the equilibrium wage for low‑skill workers, it produces the same left‑ward shift in labour supply and can cause unemployment among those workers.
3. Reasons for differences in wages (Syllabus 3.3.3)
Reason for wage difference
Explanation & IGCSE‑level example
Skill level
Higher‑skill workers are more productive, so firms pay higher wages (e.g., a surgeon vs. a care assistant).
Sector of activity
Wages vary between sectors because of profitability and market conditions (e.g., finance sector pays more than agriculture).
Geographical location
Regions with higher living costs or stronger demand pay more (e.g., London vs. a rural county).
Discrimination
Wages may differ for workers with the same productivity because of gender, ethnicity or age bias (e.g., women earning less than men in similar roles).
Public vs. private ownership
Public‑sector jobs often have lower pay but better security; private‑sector jobs may pay more but have less job security (e.g., teachers vs. private tutors).
4. Occupational mobility (Syllabus 3.3.4)
Occupational mobility is the ability of workers to move between different occupations.
Education and training – higher qualifications increase the transferability of skills.
Technological change – creates new occupations (e.g., data‑analyst) and makes others obsolete.
Labour‑market information – online portals, career‑guidance services reduce information costs.
Wage differentials – large pay gaps motivate retraining and switching.
Regulatory environment – licensing and professional qualifications can open or close pathways.
Age and culture – younger workers may be more willing to switch; cultural expectations can either encourage or restrict change.
5. Geographical mobility (Syllabus 3.3.4)
Geographical mobility is the willingness and ability of workers to move from one location to another in search of work.
Transport infrastructure – roads, rail, air links lower moving and commuting costs.
Housing market conditions – availability and affordability of accommodation influence relocation decisions.
Family and social ties – strong networks can act as a barrier to moving.
Regional wage differentials – higher wages in certain areas attract workers from lower‑paying regions.
Government policies – relocation grants, tax incentives, or migration restrictions affect movement.
Age and culture – younger people are generally more mobile; cultural norms may discourage relocation.
6. Recent changes influencing labour mobility
Recent development
Effect on occupational mobility
Effect on geographical mobility
Expansion of tertiary education
More workers acquire transferable skills, making job switches easier.
Graduates are prepared to relocate to university towns or graduate‑job hubs.
Digitalisation & remote work
New occupations (e.g., digital marketer) emerge; up‑skilling can be done online.
Remote work reduces the need for physical relocation, yet “digital hubs” attract talent.
Global supply‑chain integration
Demand for specialised technical skills rises, prompting retraining.
Production shifts to low‑labour‑cost regions, prompting internal migration toward industrial clusters.
Policy reforms (e.g., deregulation of professions)
Lower barriers to entry in previously protected occupations.
Relaxed residency requirements encourage movement across regions.
Improved transport & logistics
Facilitates commuting, allowing workers to take jobs farther from home without full relocation.
Reduces travel time, making distant regions more accessible for permanent moves.
7. Economic modelling of mobility decisions
Workers compare the expected utility of staying with the utility of moving:
Umove = E(Wnew) – Cmove
E(Wnew): Expected earnings (including non‑monetary benefits) in the new occupation or location.
Cmove: Total cost of moving – financial outlay, psychological stress, opportunity cost of leaving the current job.
A worker will relocate or switch occupation when Umove > Ustay.
8. Implications for policy‑makers
Invest in lifelong‑learning programmes to boost occupational flexibility.
Develop affordable housing and efficient transport networks to lower geographical barriers.
Provide up‑to‑date, publicly accessible labour‑market information portals.
Offer targeted incentives (e.g., relocation grants) for regions facing labour shortages.
Review licensing and professional regulations to ensure they do not unnecessarily restrict mobility.
Monitor the impact of trade‑union agreements and minimum‑wage levels on unemployment.
Suggested diagram: Flowchart of a worker’s decision‑making process for occupational or geographical mobility, showing inputs (wages, costs, information, policy) and the comparison of Umove vs. Ustay.
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