This draft report, which the Productivity Commission is seeking public comment on, argues that geographic labour mobility is helping the economy adjust to major structural change, and has enabled wealth to be spread across the country.
Geographic labour mobility is an important element of a well-functioning labour market. By improving matches between employers and workers, geographic labour mobility can contribute to economic efficiency and community wellbeing.
Advances in transport and communication technologies have broadened the scope of geographic labour mobility. This mobility can take the form of residential moves, long-distance commuting and telecommuting.
Geographic labour mobility has been an important mechanism for adjusting to the demographic, structural and technological forces shaping the Australian economy. It has accommodated differences in the pace of economic activity across Australia and enabled wealth to be more widely distributed across the country.
Australians move residence relatively frequently. These movements, together with the increase in long-distance commuting and temporary immigration, have assisted in meeting labour demand in many parts of the country.
Labour does appear to be responding to market signals and moving to areas with better employment and income prospects.
The main factors affecting location decisions are personal, and attempts by government to act in contradiction to them are unlikely to be effective.
There is no clear relationship between mobility, joblessness and the persistence of high unemployment in some areas.
While geographic labour mobility is assisting labour market adjustment, there is room for improvement.
Areas of skills shortages remain and, at the same time, there are areas of high unemployment.
There are no simple levers to affect geographic labour mobility. Many policies aiming to influence where people live and work in regional and remote areas have had limited effectiveness.
The negative consequences of some poorly designed policies, such as taxation, housing and occupational licensing, include reduced geographic labour mobility. Reform in these areas would lessen impediments to geographic labour mobility, and also have broader benefits.