Regional Studies, Vol. 39.5, pp. 585–601, July 2005
Diversification, Specialization, Convergence and Divergence of Sectoral Employment Structures in the British Urban System, 1991–2001 DAN O’DONOGHUE* and IVAN J. TOWNSHEND† *Department of Geographical and Life Sciences, Canterbury Christ Church University College, Canterbury CT1 1QU, UK. Email:
[email protected] †Department of Geography, University of Lethbridge, 4401 University Drive, Lethbridge, Alberta T1K 3M4, Canada. Email:
[email protected] (Received October 2003: in revised form July 2004) O’D D. and T I. J. (2005) Diversification, specialization, convergence and divergence of sectoral employment structures in the British urban system, 1991–2001, Regional Studies 39, 585–601. This paper examines the changing employment structure of 150 travel-to-work areas (TTWAs) in Britain from 1991 to 2001. Using data from the Annual Employment Survey and the Annual Business Inquiry, 20 sectors of economic activity are defined and investigated. The analysis clearly identifies the continued shift away from primary and manufacturing employment as increasingly more people are employed in the so-called service-based and informational economy. Clear spatial patterns emerge associated with employment change across sectors and these are also explored. Given the changing pattern of employment and the spatial characteristics of each sector, new patterns of specialization and diversification are expected to emerge. The analysis identifies these patterns and places their explanation into the context of changing technology and skills. It becomes clear that at an urban system level there is a weak convergent trend across urban system. However, when the largest places are examined separately, it is apparent that the largest urban areas in Britain appear to have employment structures that are divergent from the rest of the urban system. This highlights the changing roles played by larger cities in Britain and has obvious implications for local labour markets and policy in those places. Specialization
Diversification
Convergence
Divergence
Urban System
Employment structure
O’D D. et T I. J. (2005) La diversifcation, la spe´cialisation, la convergence et la divergence des structures sectorielles de l’emploi dans le syste`me urbain britannique de 1991 a` 2001, Regional Studies 39, 585–601. Cet article cherche a` examiner l’e´volution des structures de l’emploi dans 150 zones de´limite´es en fonction des trajets quotidiens pour se rendre au travail (Travel To Work Areas) en Grande-Bretagne de 1991 a` 2001. A partir des donne´es provenant de l’enqueˆte annuelle sur l’emploi (Annual Employment Survey) et de l’enqueˆte annuelle aupre`s des entreprises (Annual Business Inquiry), on de´limite et examine vingt secteurs d’activite´ e´conomique. L’analyse identifie clairement le de´placement de l’emploi des secteurs primaire et secondaire au fur et a` mesure qu’une proportion plus e´leve´e de la population active travaillent dans la soi-disant e´conomie des services et de l’information. On examine aussi des distributions ge´ographiques tre`s nettes qui voient le jour et qui sont lie´es a` l’e´volution de l’emploi a` travers les secteurs. Vu la nouvelle distribution de l’emploi et les caracte´ristiques ge´ographiques de chaque secteur, on s’attend a` ce que de nouvelles distributions de la spe´cialisation et de la diversification voient le jour. L’analyse identifie ces distributions et les relativise en termes de l’e´volution de la technologie et des compe´tences. Il s’ave`re que, a` l’e´chelle du syte`me urbain, la tendance a` la convergence a e´te´ faible. Toujours est-il que, si on examine se´pare´ment les endroits les plus grands, il s’ave`re que les zones urbaines les plus grandes en Grande-Bretagne ont des structures d’emploi qui divergent de celles du reste du syste`me urbain. Cela souligne l’e´volution des roˆles joue´s par les villes les plus grandes en Grande-Bretagne et a des conse´quences e´videntes pour les marche´s du travail locaux et pour la politique dans de tels endroits. Spe´cialisation
Diversification
Convergence
Divergence
Syste`me urbain
Structure de l’emploi
O’D D. und T I. J. (2005) Die Diversifizierung, Spezializierung, Konvergenz und Divergenz der nach Sektoren geordneten Erwerbsta¨tigkeitsstrukturen im britischen Stadtsystem im Zeitraum 1991–2001, Regional Studies 39, 585–601. Dieser Aufsatz untersucht die sich wandelnde Erwerbsta¨tigkeitsstruktur in 150 Pendlergebieten (travel-to-work areasóTTWAs) in Großbritannien im Zeitraum 1991–2001. Mit Hilfe von Daten des Jahresarbeitsberichts (Annual Employment Survey) und der Jahresgescha¨ftsumfrage (Annual Business Enquiry) werden 20 Sektoren wirtschaftlicher Beta¨tigung definiert und unetrsucht. Diese Analyse identifiziert eindeutig die weiter anhaltende Verschiebung von Erwerbsta¨tigkeit im Prima¨r-und herstellenden Sektor auf solche in der sogenannten Dienstleistungs-und Informationsindustrie. Es treten deutlich ra¨umliche Muster auf, die mit Umstellungen in allen Sektoren in Verbindung gebracht, und auch untersucht werden. Angesichts der sich wandelnden Vorga¨nge 0034-3404 print/1360-0591 online/05/050585-17 ©2005 Regional Studies Association http://www.regional-studies-assoc.ac.uk
DOI: 10.1080/00343400500151830
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auf dem Arbeitsmarkt und den ra¨ umlichen Eigenschaften jedes Sektors wird erwartet, daß sie neue Muster der Spezializierung und Diversifikation hervorbringen. Die Analyse identifiziert diese Muster, und stellt ihre Erkla¨ rung in den Zusammenhang sich wandelnder Technik und Fa¨ higkeiten. Es wird deutlich, daß auf der Ebene des Stadtsystems eine schwache Tendenz zur Konvergenz aller Stadtsysteme stattgefunden hat. Wenn die gro¨ ßten Orte jedoch gesondert betrachtet werden, zeigt es sich, daß die gro¨ ßten Stadtgebiete in Großbritannien Erwerbsta¨ tigkeitsstrukturen aufweisen, die sich von den u¨ brigen Stadtsystem unterscheiden. Dies unterstreicht die sich wandelnden Rollen, die gro¨ ßere Sta¨ dte in Großbritannien spielen, und hat offentsichliche Implikationen fu¨ r o¨ rtliche Arbeitsma¨ rkte und Bestrebungen in solchen Orten. Spezializierung
Diversifizierung
Konvergenz
Divergenz
Stadtsystem
Erwerbsta¨ tigskeitsstrukturen
O’D D. y T I. J. (2005) La diversificacio´ n, especializacio´ n, convergencia y divergencia de las estructuras de empleo sectoriales en el sistema urbano brita´ nico, 1991–2001, Regional Studies 39, 585–601. Este artı´culo examina la cambiante estructura del empleo en 150 travel-to-work areas (TTWAs) en Gran Bretan˜ a para el periodo comprendido entre 1991 y 2001. Utilizando datos de la Encuesta Anual del Empleo (Annual Employment Survey) y de la Encuesta Anual del Comercio (Annual Business Inquiry), hemos elegido e investigado un total de veinte sectores de actividad econo´ mica. El ana´ lisis que se ha llevado a cabo muestra de forma clara una disminucio´ n cada vez mayor del empleo en manufacturas y en el sector primario a medida que aumenta el nu´ mero de personas empleadas en lo que se denomina economı´a de la informacio´ n y el sector servicios. Emergen una serie de patrones espaciales definidos que esta´ n asociados a los cambios experimentados en el empleo en dichos sectores y e´ stos tambie´ n se examinan. Dada la situacio´ n cambiante del empleo y las caracterı´sticas espaciales de cada sector puede llevar a que germinen nuevos patrones de especializacio´ n y diversificacio´ n. El ana´ lisis identifica estos patrones y los explica en base al cambio tecnolo´ gico y a las capacidades del personal laboral. Resulta claro que en lo que atan˜ e a los sistemas urbanos, existe una de´ bil tendencia convergente a trave´ s del sistema urbano. No obstante, cuando se examinan por separado las regiones ma´ s grandes, resulta aparente que las zonas urbanas ma´ s extensas en Gran Bretan˜ a parecen tener estructuras de empleo diferentes de las que existen dentro del sistema urbano. Esto enfatiza el papel cambiante que las grandes ciudades desempen˜ an en Gran Bretan˜ a y tiene implicaciones polı´ticas ası´ como implicaciones para los mercados laborales locales. Especializacio´ n
Diversificacio´ n
Convergencia
Divergencia
Sistema urbano
Estructura de empleo
JEL classifications: J21, R11, R12
INTRODUCTION EMPLOYMENT STRUCTURES IN THE BRITISH URBAN SYSTEM Contemporary geographical research into changes in urban and regional economies in the recent past has tended to focus on, or at least be contextualized in, debates surrounding issues linked to a wide range of geo-processes such as globalization (S, 1991), deindustrialization (L, 1991), industrial restructuring (M, 1991), and the ongoing revolutions in information and telecommunications and other technologies that some would argue are changing the very nature of place (M, 1997; C, 2000). Simultaneously, local forces, institutions and agents mediate these processes through systems of governance and regulation leading to a variety of spatial outcomes, such as the employment structure of urban centres that are based on unique localized characteristics (O’D, 2002). The literature on economic change and concomitant change in the spatial, social and economic order of urban places is vast. It ranges across geographic scales from research on global or world cities (S, 1991, F and W, 1982, inter alia) and their particular form of dominance, to studies of individual neighbourhoods and communities (B, 1993; L and S, 2000; T, 2002). In the sense that a hierarchy (MC, 2001) of places constitutes an urban system, or network of linked places
of different size, the literature ranges from macro-scale analyses of continental or national systems (D and D, 1993; H, 1993; B and F, 1996; B, 2002) down to the daily urban systems that constitute metropolitan and functional areas (V L, 1998). Urban places are dynamic – they are constantly changing in response to this variety of local and global forces – and as such, they are in a constant state of flux. This paper sets out to investigate that flux. One way in which urban places reflect the influence of unique local forces as well as mediating wider global processes is through their specific mixture of employment across industrial sectors. An analysis of the sectoral mixtures of employment in urban locations, and how these have changed to become more diverse or more specialized, should provide valuable insights into the character and performance of urban places and systems. Towards this end, this paper aims to identify the changing patterns of employment structures within urban areas across the British urban system.1 The sectoral distribution of employment will be examined to determine the extent of variation between places, and to identify whether previously observed trends such as convergence or divergence (O’D, 2000) are still taking place. The measures of convergence and divergence used in this paper represent the extent to which urban employment structures either approach or deviate from
Sectoral Employment Structures in the British Urban System, 1991–2001 a system-wide employment profile. Therefore, a direct link exists between an area’s level of specialization in a particular group of economic activities and the anticipated degree of convergence or divergence that will take place within that area over time. In addition, if all places were specializing across a variety of sectors, perhaps because of competitive advantage, then one would expect the employment structures of these places to diverge from the remainder of the urban system. There has been much debate about the benefits of diversity and/or specialization (O’D, 1999, p. 550), but these arguments have perhaps been most concisely encapsulated by P (2003, p. 562) who links these phenomena to the cluster concept and regional economic performance. It is in this context of exploring the links between convergence, divergence and specialization with economic performance that employment structures within the British urban system are investigated herein. More specifically the paper will outline the changing character and sectoral employment mix of 150 travelto-work areas (TTWA) in Britain from 1991 to 2001; determine the degree to which TTWAs have become more diverse or specialized through time; and, considering the evidence regarding diversification and specialization, establish whether convergence or divergence of employment structures has occurred in the urban system. The paper is organized to reflect these aims. The following section reviews the recent literature on the diversification, specialization, convergence and divergence of urban employment structures. This will be followed by an overview of the data as well as a review of the measures and techniques that have been used. This is followed by a presentation, analysis and discussion of the results – each section deals with a specific aim. Finally, a summary of the key findings will be discussed in the concluding section.
EMPLOYMENT STRUCTURES IN THE BRITISH URBAN SYSTEM Diversification and specialization of employment structures Urban and regional science is largely concerned with the measurement and analysis of sets of indicators that help researchers uncover the underlying economic structures of places, so that a better understanding may be gained of how regional economies function and interact with other places. Each urban place or regional economy has characteristics that reflect a range of factors and determinants that are place-specific. At the same time global process are acting upon all places in a regional system simultaneously, often in a path-dependent nature (B and G, 2003). A number of approaches have previously been adopted by researchers in order to establish the extent to which the structural characteristics of these economies vary, based on both
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local and global influences. Much of the recent literature in this field has focused on the link between the prosperity of cities and regions, their relative location, and the types of industry in which they specialize, with particular emphasis on high-tech sectors and the skills of the workforce. One way of determining the extent of this specialization is to examine the employment mix across a range of industrial sectors. As a reflection of an economy, employment structures provide a reasonable pointer to that economy’s composition. Generally, it is easy to identify whether an economy is relatively specialized or diversified. In similar fashion it is possible to trace places through time to identify the direction in which the employment structures of places change, i.e. do they become more specialized or more diverse through time? Once change is identified for individual places it is possible to analyse collectively a series of places in the hope of uncovering some more generalized trends which will inform us as to the changing nature of cities, regions and their economies. This often implies an analysis of the way in which the sectoral employment mix of a particular city relates to a whole series of other indicators and measures of local economies and performance such as city size and growth. The knowledge gained through this kind of systemic analysis is essential for sound policy formulation within the context of urban systems intervention and regional development. It is also beneficial to those researchers interested in uncovering more widespread trends and patterns than can be found through the analysis of case study research into individual places. Where individual places fit, or the extent to which they are integrated with other parts of the urban system (T et al., 2004), is just as important as determining what happens in individual centres, but is so often overlooked by geographers today. Numerous studies have used measures of diversity and specialization of employment to study the character of urban and regional economies. It is important to make clear that employment structure, or mix, refers to the industrial sector composition of the workforce of a selected area, not the occupational mix. A wide range of studies of specialization and diversification has been conducted in the past, each with their own specific focus. Previous research has emphasized the link between industrial specialization or diversification and a range of themes, including: economic performance (A, 1986); occupational diversification (B-S and P, 1993); population and labour force growth (C, 1978; O’D, 1999); city size (C and S, 1971; C, 1973; M, 1975; B, 1992; M, 2003); regional size (D and MC, 1999); unemployment (M and K, 1993); the stability of employment in an urban system through time (D and D, 1993); measures used for the purpose of determining levels of diversification (D
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and MC, 2002); and a review of theories looking at issues related to diversity and specialization (D and P, 2000). These, and other research on diversification of employment structures were conducted at a variety of scales in numerous contexts, including: the USA (A, 1986; M, 1989; B-S and P, 1993; M and K, 1993; M, 2003); Canada (C, 1973, 1978; M, 1981, 1989; D and D, 1993), the former Yugoslavia (B, 1992) and Britain (G, 1979; D and MC, 1999, 2002; O’D, 1999, 2000). From this brief survey of previous research, it is apparent that research on diversification and specialization has been undertaken for some time, yet it appears somewhat limited in spatial extent. This may reflect the lack of articles on this topic that have been translated from other languages into English, but with one exception, the studies identified have taken place in a North American, and more recently, a British context. Since the seminal works of Krugman and Porter in the early 1990s, economists have highlighted ways in which the ‘New Economic Geography’ or ‘Geographical Economics’ (B and G, 2003) can aid in understanding spatial variations between places. Though not generally accepted by all geographers, these researchers do demonstrate how regional agglomerations can come about, often as the result of increasing returns, increasing competitiveness and increasing productivity. These factors are all indicative of performance but unfortunately cannot be measured for each sector and location at this scale of analysis. Following the logic of comparative advantage, places with higher levels of performance will therefore engage in increasing specialization of economic activity in particular sectors, and will therefore be seen to diverge from other places. Alternatively, if all places were achieving very similar levels of productivity there should be convergence. In this paper, employment structures are considered a surrogate for the performance of an economy relative to other economies in the urban system. While never explicitly dealing with employment structures the new geographical economics may offer valuable insights into how employment structures reflect spatial variations in economic performance throughout Britain and as such needs to be considered. While not the focus of this paper, aspects of the new geographical economics will be discussed where relevant.
Convergence and divergence of employment structures The study of diversification and specialization and their link to other urban and regional characteristics as outlined above should not be seen as ends in themselves. It is possible to use measures of specialization and diversification across a range of places to provide
evidence for other trends, particularly on a systemic basis. Reasons why convergence or divergence in a system of places might be expected have been identified explicitly (D et al., 1996; O’D, 2000) as well as implicitly in much of the urban literature in general. The majority of research into convergence and divergence has focused on regional income convergence (B and S-I-M, 1991; D, 1994), economic performance (C and D, 1996) and policy (A, 1996). Alternatively, on a wider scale research has focused on aspects of the convergence of countries as levels of development change globally (L, 2000; A et al., 2003). While somewhat limited in number to date, analyses of employment structures, or aspects of industrial composition, have also been researched to identify whether there has been convergence or divergence of urban economies. Most of these studies limited themselves to an examination of only two or three generalized aspects of the industrial mix leading to convergence/divergence of employment structures such as employment in manufacturing industries (D, 1997; K, 1999) and services (B and P, 1993; D, 1997) or specific sectors and their influence on convergence/ divergence (D et al., 1996). G (1990) found that divergence of personal income growth in the USA in the 1980s was partly accounted for by industry mix. Only a recent study (O’D, 2000) has explicitly examined diversification and specialization across the industry mix to determine whether convergence or divergence of employment structures has occurred. The findings from that paper indicated that there was a convergence of employment structures throughout most of the British urban system from 1978 to 1991, however there was a divergence amongst the larger, more metropolitan, locations. It was suggested that these trends may have been time specific, not unlike a divergent trend found elsewhere (D et al., 1996), resulting from restructuring of the British economy where increasing employment was to be found across the service sector. Without revisiting all the arguments and debates surrounding why convergence or divergence of employment structures might be expected this paper will explore changing patterns of employment in the British Urban System from 1991 to 2001. The purpose being to determine whether the trends observed throughout the 1980s were merely an isolated temporal event, as identified elsewhere (D et al., 1996), or indicative of some more significant and ongoing trend within the urban economies of Britain.
Data and techniques The employment data, as mentioned above, can be considered surrogate measures/reflections of regional
Sectoral Employment Structures in the British Urban System, 1991–2001 performance, are derived from a number of sources, each of which reflects the evolution of collection methods in Britain over the period in question, i.e. 1991–2001. The data was collected from the National Online Manpower Information System (NOMIS) and derived from three sources: the Census of Employment (CE) for 1991 (C S O, 1991); the Annual Employment Survey (AES) for 1995 (C S O, 1995); the AES and Annual Business Inquiry (ABI) in 1998 (O N S, 1998); and the ABI in 2001 (O N S, 2001). As the data were collected from places of employment the selfemployed population are absent from the analysis, this will be revisited later. In 1998, the ABI was conducted in parallel with the AES so that the differences between the two counts could be assessed. Both counts were based on estimates and there were substantial changes in how the data were collected (for more details, see J, 2000; and P, 2001). It was discovered that the AES had been underestimating the numbers employed nationally by almost 1 million and therefore the previous AESs back to 1995 were revised upward to reflect this. The Standard Industrial Classification (SIC) is the basis for the grouping of employment data according to sectors. The SIC in Britain has also changed over the period in question. It was updated in 1992 and replaced the previous 1980 SIC. As the SIC can be disaggregated at a variety of digit-levels, it was possible to reconfigure the data so that data classified according to the 1980 SIC, i.e. 1991 employment data, could be reassigned and aggregated so that the data for more recent years would closely match data aggregated according to the previous SIC. This was necessary so that employment data would be comparable across the years under investigation. The changing data collection and SICs highlighted above outline some of the difficulties inherent in doing longitudinal studies of this nature in Britain. For longitudinal research to be conducted on employment data over this period there is little choice but to accept these changes. Upon analysis of the data, it was found that any differences that arose are minor and that as long as one recognizes the changes and their nature, the data is very robust. The decision to investigate the period from 1991 to 2001, and intervening years, was taken for a number of reasons, mainly pragmatic. First, these dates match up with years in which Census of Population were conducted and results will be relatable to those data. Second, as identified above, this period straddles a number of changes in the method of data collection, both in survey method and data classification, and it is important to ascertain how this may effect analyses using these different sources and provide a benchmark for future research. Third, a 10-year period should prove sufficient to identify trends in the data; and finally, this period needs to be investigated to determine if trends in
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employment structures found in the preceding period have continued throughout the 1990s. In addition, as this paper replicates work contained elsewhere (O’D, 2000), some reference will be made to data and trends found in that paper dating back to 1978. Ideally, the selected dates for the analysis should coincide with similar stages of the business cycle. In this instance (based on unemployment data for June of each year), 1991 falls a year after the bottoming out of unemployment in Great Britain at the peak of the last business cycle while 2001, as reflected by unemployment figures, falls very close to the peak of the present business cycle (although unemployment did fall marginally lower in 2002). However, 1991 also represents the closest possible date, for which data is available, to the peak of the previous cycle and was thus chosen as the start date for this analysis. In addition, upon examining the employment structure data for this and previous research there was little evidence that the business cycle has any impact on long-term sectoral composition trends, i.e. the prevailing macro-economic conditions do not exert any disproportionate impacts on particular sectors through time. While it is inevitable that there may be sudden shocks to the system leading to increased or decreased shares of employment Table 1 clearly indicates that this has not occurred in the British urban system. Finally, as the employment data is used to generate summary measures of employment structure, e.g. Gini coefficients, the impacts of sudden changes in the level of employment (as a result of the business cycle) in any one sector or location across 150 urban centres are likely to be marginal. For each reporting period included in the analysis the employment data were aggregated into 20 industrial sectors which, broadly speaking, reflect the nature of employment across all economic activities in the British Urban System. With the exception of Mining, the other primary sectors were excluded from the analysis due to their more rural nature. There are four Manufacturing sectors included and 15 broadly defined service sectors (if one includes Construction as a service activity); see Table 1 for a complete breakdown. This breakdown of activities closely resembles the numbers employed nationally in each of the primary, secondary and tertiary activities. Unlike many other studies of industrial diversity and specialization, this study includes all non-agricultural economic activity and not just primary and manufacturing activities. Given that manufacturing accounts for less than 20% of employment in Britain today any analysis of employment structures that focused on only this part of the workforce would not offer a true reflection of employment diversity and specialization in the urban system. It is recognized that the decision to use 20 sectors, as outlined above, is arbitrary and that there are sizeable differences between the numbers employed in individual sectors even if collectively they do reflect the macro distribution of activities. However, this would
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be true for any selection of sectors used, and the justification for having sectors of equal size is not particularly sustainable, considering one does not expect to find equal distributions of activity in places, particularly through time. In terms of the number of sectors used, a choice in favour of fewer sectors would mask variations within the system whereby a choice of considerably more sectors would lead to a loss of coherence (O’D, 1999, p. 552). As mentioned above, where changes occurred in the SIC data were disaggregated and then re-aggregated for 1991 so that as close a match between the two SICs could be established. However, due to changes in the SIC and the changed constitution of some sectors it was not always possible to have a perfect match across years with different SIC. Nevertheless the match up is very close, upon analysis the mismatches were minor in terms of numbers employed people thus indicating the robust nature of the data. The analysis uses the TTWA as the geography of choice. As the employment data in the CE, AES and ABI are workplace based, the employment data reflect the economic character of urban places that act as functionally cohesive units. The TTWA, based as it is on commuter flows, is very successful at describing economically coherent functional units. Even though TTWAs include rural areas in the hinterland around an urban centre it is assumed that most of the population (outside of the agricultural sector) work in the major urban centre upon which the TTWA is focused therefore, in essence the TTWA is describing an urban or city-region. In the absence of any suitable metropolitan definition in Britain, the TTWA acts as a proxy for this type of measure, not unlike the metropolitan units used in North America. While not particularly useful for other kinds of urban analysis, in particular social analysis, the TTWA is a conceptually satisfactory geography to use for workplace-based analysis of employment. The whole of Britain is covered by 322 TTWAs (using 1984 boundaries). However, this research is only concerned with TTWAs that have a strong urban character. One element of this study is to establish whether employment trends found in Britain in earlier time frames are ongoing, therefore it was decided to use the same set of TTWAs as was used in previous studies of the nature of employment and change in the British Urban System (O’D, 1999, 2000). Therefore, this study uses the same 150 TTWAs using the 1984 defined boundaries, as were used previously. The previous choice of the TTWA as the unit of analysis required that places had workforces [30 000 with less than 5% of the population engaged in Agricultural activities thus only including the most urbanized TTWAs in the country. Some TTWAs have declined in size since 1991 so although they now fall below the 30 000 workforce threshold they remained in the analysis. TTWA boundaries in Britain were
revised in 1998 but it was decided that for the sake of continuity, consistency and comparability the 1984 boundaries would be maintained. A number of techniques and measures typically used by urban and regional economists are used throughout the empirical analysis in this paper. Employment data are analysed across the 20 employment sectors using location quotients (LQ) and the Gini coefficient of specialization. These are two very commonly used measures. Therefore, their usage will not be described in any great detail here. LQs measure the relative local representation of employment in a sector in a given TTWA compared with the urban system averages for each sector. As such, they provide insights into the sectoral composition of employment in urban areas visa`-vis the remainder of the urban system. As there are 20 LQs for each of 150 urban centres over four periods, the LQs are not presented explicitly as part of the analysis. However, note that the LQs were used to generate the dissimilarity indices used in Table 2. The LQs are also used to rank sectors as a preliminary step in the calculation of the Gini coefficient that acts as a summary indicator which measures the deviation of employment structures in TTWAs from the urban system benchmark, or profile. As the authors are interested in trends in urban places, it was decided that non-urban places should be excluded from any base to which urban areas are compared. Therefore, urban system totals are used rather than national totals as the base profile, or benchmark, from which the Gini coefficient is measured. The 150 TTWAs analysed herein account for approximately 90% of the workforce of the nation so by excluding the other 172 TTWAs (1984 boundaries) the largely rural parts of the country are omitted. The Gini coefficient ranges in value from 0 to 1, the former representing perfect diversity of employment, i.e. matching the system profile of employment, while the latter value represents a hypothetical value for total specialization of all employment into one employment category. This approach, or variations on this approach using slightly different measures of specialization/diversity, has been used for studies of this nature by numerous researchers studying employment across national urban systems (C, 1973, 1978, inter alia; M, 1975, 1981, 1989; D and D, 1993; D and MC, 1999, 2002; O’D, 1999, 2000). The use of the measures and techniques outlined above in association with simple descriptive statistics will provide insights into processes such as: the spatial dispersal and concentration of activity; the changing nature of employment structures in individual TTWAs, i.e. whether they are becoming more or less specialized/ diverse through time; and the systemic nature of employment structures of TTWAs relative to each other across the system, i.e. whether there is a convergence or divergence of employment structure across the urban system, or subsets thereof.
Sectoral Employment Structures in the British Urban System, 1991–2001
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Table 1. Employment structure of the British urban system, 1991–2001, for 150 travel-to-work areas Sector Minerals and Extraction Ore and Metal Chemicals and Plastics Machinery and Electrical Other Manufacturing Construction Utilities Wholesale Retail Hotel and Catering Transportation Communications Finance, Insurance, Real Estate Advanced Producer Services Government Education Health and Social Work Cultural and Recreational Personal and Domestic Other Services System workforce National workforce System (%)
1991 CE
1995 AES
1998 AES
1998 ABI
2001 ABI
0.6 3.7 2.2 6.5 6.3 4.7 1.0 4.3 12.3 5.4 4.3 2.2 6.0 10.5 6.7 8.0 10.8 2.5 1.1 0.9 100.0
0.3 3.4 2.2 5.9 5.9 4.1 0.7 4.6 12.4 5.3 4.1 2.1 6.2 12.6 6.3 7.9 11.2 2.6 1.2 1.1 100.0
0.3 3.1 2.1 5.9 5.5 4.6 0.6 4.8 12.5 5.7 4.0 2.1 5.9 13.8 6.0 7.7 10.4 2.4 1.3 1.2 100.0
0.3 2.9 2.1 5.4 5.3 4.5 0.5 4.9 13.2 6.3 4.0 2.1 5.9 13.8 5.7 7.8 10.4 2.4 1.4 1.3 100.0
0.2 2.4 1.8 4.7 4.4 4.5 0.5 4.5 13.3 6.3 4.1 2.3 5.9 14.8 5.3 8.4 10.8 2.8 1.5 1.3 100.0
18 855 421 21 104 294
19 111 597 21 397 750
20 405 848 22 843 784
21 312 037 23 876 249
22 340 401 25 016 952
89.3
89.3
89.3
89.3
89.3
Change (%) ñ60.9 ñ35.4 ñ19.2 ñ27.9 ñ29.8 ñ4.1 ñ46.8 5.2 8.2 18.0 ñ3.6 1.2 ñ0.8 41.3 ñ21.2 5.7 ñ0.6 11.0 43.2 45.9
Notes: ABI, Annual Business Inquiry; AES, Annual Employment Survey; CE, Census of Employment.
EMPLOYMENT STRUCTURE CHANGE Sectoral composition of employment in the urban system The most obvious starting point for an analysis of employment structures in Britain is to investigate changes that have occurred across the urban system for all sectors of the economy. Table 1 illustrates a number of changes in employment structures across the 150 TTWAs that constitute the British urban system. It also has a number of other purposes. First, it introduces the 20 sectors or employment categories that are being used in this research. Second, it identifies the percentage representation in each employment category from 1991 to 2001, including data for intermediate years, which has the effect of highlighting variations in the data resulting from changes to the SIC and Surveys described above. Third, Table 1 enumerates the size of the employed workforce for both the urban system and for Britain as a whole, and demonstrates that the percentage of the urban system workforce has remained unchanged despite the changes in data collection. Fourth, by including two columns for 1998 data for the AES and ABI, Table 1 highlights both the extent to which the AES undercounted the workforce and the very limited impact this had on the percentages for specific sectors, thus demonstrating the robustness and suitability of the data for further analysis. The sectors in Table 1 are organized so that the top row represents the Primary sector, the subsequent four rows represent the Secondary sector and the
remaining sectors are all considered to be service or, broadly speaking, tertiary sectors. Table 1 highlights the continued growth of the workforce, even when the undercount of the CE and AES is considered, to over 25 million employees in 2001. In terms of individual sectors, it is clear that major declines in employment continued in the Primary and Secondary sectors of the economy and the five categories that make up these sectors now account for less than 15% of the employed workforce of urban Britain. This is important for two main reasons: first, it demonstrates that the period of industrial restructuring and rationalization so well documented throughout the 1970s and 1980s is not yet complete at a system level; and second, the very fact that less than 15% of employment is now in manufacturing implies that the value of studies of diversity and specialization that only explore these industrial categories must be reconsidered. While manufacturing remains a very important sector to local economies, particularly in some centres, as a source of employment variation across the urban system, these sectors are losing their ability to distinguish between places due to their small size and relatively decreasing returns. In effect, increasingly more service sector activities are traded (P, 2003) and considered basic and this has eroded the basic and non-basic employment dichotomy to the extent that the role of manufacturing as the key component of the economic base and thus source of differentiation, at least in terms of employment structure, has diminished.
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While decline still continues in primary and secondary employment, the service sector continues to grow. Over 85% of employment is now in the ‘service sector’. This can only reinforce the consensus that we now live in a post-industrial society. However, this growth perhaps masks change in some categories within the wider sector. There have been declines in employment share in the Utilities, Government, Construction, Transportation and the Finance, Insurance and Real Estate (FIRE) sectors each of which needs to be explained. The major declines in share in the service sector are in the Utilities and Government sectors. The percentage decline in employment in Utilities has been the largest of any service sector and can be explained by the break up of monopolies in the sector and the subsequent privatization and rationalization of operations. The share of people employed in the Government sector is more difficult to explain but analysis of the data suggests that some of the loss of share is the result of changes in the SIC and another likely source of decline is cuts and changes in government spending particularly at local authority level. This invariably has led to greater levels of outsourcing, suggesting that some of the employment has been shifted to other employment categories. The declines in Construction and Transportation are limited to declines in share of approximately 4%. However, this decline in share masks an actual increase in the numbers employed in both sectors, the same can be said for both the Health and Social Work and FIRE sectors which despite minor declines in share over the period in question, displayed a substantial increase in their absolute numbers employed. The remainder of the service sector have continued to grow albeit at varied rates, most likely due to differentially increasing returns and productivity, with some fluctuations in share depending on the year of analysis. If one looks briefly at the figures in Table 1 it becomes clear which sectors are growing most rapidly. Advanced Producer Services (APS) are continuing to grow at an astounding rate and has become the single largest category of employment in this analysis, accounting for a greater employment share than the Primary and Secondary sectors combined. This would seem to confirm that we live not just in a post-industrial society but an ‘informational society’ (C, 2000) where urban regions often act as nodes for the transfer and sharing of knowledge (S, 2003). Other sectors that exhibited rapid increases of employment share are Cultural and Recreational Activities, Personal and Domestic Services, Other Services sector along with the Retail sector. The Retail sector is the largest of these in terms of employment share and accounted for over 13% of the workforce in 2001 – evidence for a widening consumer society. Similarly the growth of Hotel and Catering employment, along with the Personal, Cultural and Other Services sectors is indicative of a shift towards an urban society that has more time and money available to spend on consumer goods and
services than in the past. These sectors seem to be linked to improvements in the quality of life in those centres, further evidence perhaps that cities are now centres of consumption, entertainment and leisure in a Post-Fordist, or Post-Modern era (L, 2001). These employment variations by sector and space have in the recent past been linked to post-modern competition between cities (C, 2003) often based on some symbolic imagery of the city. Three remaining categories displayed modest increases in employment share from 1991 to 2001 and these included the Education, Wholesale and Communications sectors perhaps each reflective of some of the changing societal emphases highlighted above. The changing nature of the service sector, broadly defined, suggests that we may need to re-evaluate how we look at studies of diversity and specialization in the future. The analysis thus far has only looked at the data for the urban system, it is important to go through this stage so that the remainder of the study has a clear context in terms of employment change. There is no doubt that system-wide change masks events in specific localities. However, it is important to recognize that there is an inertia at the macro-level propelling the system in concert towards new forms of employment and changing distributions. It is important to recognize that some of the fastest growing and declining sectors are also the largest, while some sectors represent a relatively small share of employment and their rates of change will have much less influence on systemic changes. This recognition is important for the subsequent analysis for two main reasons: first, the sectors with larger employment share are likely to have a greater influence on some of the measure that will be used; and second, the distribution of sectors across the space economy is highly variable. The next section begins to explore the spatial impacts of macro-sectoral changes on the urban system so that our understanding of change in the urban system is enhanced. Dispersal and concentration of activities in the urban system As described above, there have been numerous changes in the sectoral shares and numbers of workers across the urban system. This knowledge, aggregated at system level, needs to be explored in more detail, particularly considering some of the spatial characteristics of each sector at this scale. There is no reason to believe all activity should be distributed evenly across space. There is a long history of location theory far too detailed to go into here, however P (2003) has succinctly described some of the expectations one might have for the spatial distribution of activity in terms of local, resource dependent and traded industries and there inherent characteristics. With this in mind, Table 2 highlights the extent to which specific sectors are becoming more concentrated or dispersed in space from 1991 to 2001, but also contains reference to
Sectoral Employment Structures in the British Urban System, 1991–2001
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Table 2. Levels of spatial concentration and dispersal for employment sectors Change, 1991–2001 Change, 1978–2001 (%) (%)
Sector
1978*
1991
2001
Concentration, 1978–1991–2001 Utilities Minerals and Extraction Wholesale Other Services Machinery and Electrical
6.76 24.23 4.25 4.73 6.30
10.98 31.93 4.02 4.76 10.32
13.81 36.51 4.36 4.91 10.49
20.5 12.5 7.8 3.1 1.6
104.3 50.7 2.6 3.8 66.5
5.19 1.83 3.96 7.71 4.70 4.43 5.56 5.64
6.72 2.21 4.38 8.44 5.09 4.70 5.89 5.76
22.8 17.2 9.6 8.6 7.7 5.7 5.6 2.1
18.3 ñ21.9 ñ7.0 ñ52.4 12.6 ñ40.6 ñ1.3 ñ12.2
11.24 3.12 7.70 3.97 4.18 4.41 4.92
11.22 3.02 7.15 3.67 3.39 3.21 3.51
ñ0.2 ñ3.3 ñ7.7 ñ8.2 ñ23.3 ñ37.4 ñ40.2
ñ20.4 ñ29.3 ñ9.7 ñ35.0 ñ35.7 ñ30.1 ñ58.8
Dispersal, 1978–1991, then concentration, 1991–2001 Communications 5.68 Retail 2.83 Health and Social Work 4.71 Chemicals and Plastics 17.74 Government 4.52 APS 7.91 FIRE 5.97 Transportation 6.56 Dispersal, 1978–1991–2001 Ores and Metal Education Other Manufacturing Culture and Recreation Personal and Domestic Construction Hotel and Catering
14.1 4.27 7.92 5.65 5.27 4.59 8.52
Source: *O’D (2000).
changes from 1978 to 1991, so that changes in patterns of spatial concentration may be observed from the earlier date. The measures used for each sector are dissimilarity indices for each sector when measured against a theoretically ubiquitous sector, i.e. the LQs for all 150 TTWAs in each sector were compared against a theoretically ubiquitous sector where the LQs for each TTWA have a value of unity representing a perfectly even distribution of the activity across the system. The resultant indices will be low where sectors are well dispersed (or relatively evenly distributed) throughout the urban system and high when relative spatial concentration occurs.2 Change through time can also be measured to identify trends in the concentrating, or dispersing, nature of activities. Table 2 clearly identifies a number of trends that are outlined below. A number of sectors display a pattern of increasing and ongoing concentration in space. These include Utilities, Minerals/Extraction, Government, Other Services and Machinery and Electrical Manufacturing. Some of the changes in the character of these sectors have been described previously however; Table 2 reinforces some of the key points, in a spatial manner. The Machinery and Electrical manufacturing sector continues to become spatially more concentrated as employment share in this type of manufacturing continues to decline and fewer places have maintained specialization in this sector. The changes in Utilities and Government sectors, described above, are all indicative of movements towards increasing rationalization
and privatization of activity, which began in the 1980s and continued through the 1990s. Employment in these sectors has become more spatially constrained in space as a result. In many ways these sectors act like the resource dependent industries described by Porter. However, as these sectors fall outside of the primary sector it might be better to consider these more as ‘factor dependent’ in terms of the nature of the specific sectors and their locational requirements. There are a number of sectors that have become more concentrated in space from 1991 to 2001, but when change is plotted back to 1978 it is apparent these sectors have dispersed spatially. Three key sectors in terms of employment share and number fall into this category: Retail, APS and FIRE. Table 2 indicates that each of these was much more dispersed in space in 2001 than they were in 1978. However, the trend was reversed through the 1990s. In the case of the Retail sector (the most spatially dispersed of all sectors) this tendency towards concentration in the 1990s is most likely evidence of the increasing importance of regional shopping centres in a consumer-based society as well the emergence of new urban forms (L, 2000) across the urban system, but in particular amongst the larger metropolitan areas. An interesting consideration at present is the likely impact of E-commerce on the future dispersal/concentration of some of these activities. L (2001, p. 212) suggests, ‘E-commerce may shift power to end users and away from intermediaries located in major
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cities, given that consumers are geographically dispersed’. If this were true, one should see a dispersal of activities linked to such consumer demand, i.e. retail activity. Alternatively e-commerce, and the internet in general, may have the opposite impact on the location of activity as certain activities will become focused at nodal and control points within the network, most likely in the larger urban centres. This might be particularly true for the Wholesale sector, which has reconcentrated spatially throughout the 1990s. APS and FIRE, while becoming more ubiquitous in space from 1978 to 2001 demonstrate concentration through the 1990s. While APS and FIRE grew rapidly in employment share and number until 1991 they tended to spread throughout the urban system, however the trend from 1991 to 2001 in these sectors is most likely the result of increasing economies of localization whereby firms in these sectors benefit from specialist non-traded local services and skilled labour markets (MC, 2001), i.e. higher productivity. The importance of face-to-face contact and the advantages these localization economies bring to larger places – such as those places where services are traded (P, 2003) that integrate into the global economy, i.e. global cities – suggests that these sectors have permeated the urban system to about as great an extent as they are likely to and the evidence is here of a re-concentration in space. The other service sectors that have become more concentrated spatially since 1991 but less so since 1978 are Health and Social Work, Transportation and Communications. Each of these activities, to some extent, display somewhat similar patterns to those identified above and relate to a rationalization and centralization of the activities in these sectors. The final group of sectors to be discussed are those that have had an ongoing dispersal trend since 1978. These are highlighted in the lower rows of Table 2. These correspond with what have been described as ‘local industries’ (P, 2003). Focusing on the service sectors it is clear that the Hotel and Catering, Construction, Personal and Domestic, Cultural and Recreation and Education sectors have each experienced dramatic dispersal throughout the system. The dispersal in most of these sectors is indicative of the continuing move towards a service-based society with an increasing emphasis on education provision and quality of life. The increasing dispersal of Construction employment throughout the system is an indication of more activity in this sector across the urban system as places, particularly those hardest hit by recession and restructuring, regenerate their economies, infrastructure and housing fabric. The two manufacturing sectors are not as easy to explain. The Ores and Metal Manufacturing sector has very gradually become more dispersed throughout the 1990s while Other Manufacturing has increased its rate of dispersal. In the case of Ores and Metal Manufacturing the increased dispersal is most likely the result of
reduced operations or closure in a limited number of location giving the appearance of dispersal, rather than the emergence of a new and more dispersed spatial strategy. The Other Manufacturing sector is composed of activities such as food and drink processing, paper and publishing, wood products, textiles, clothing and footwear, manufacture of jewellery, toys, furniture, sports goods and recycling related activities. In terms of the scale of operation most of these activities are relatively small in the numbers employed compared to larger manufacturing operations in electronics, machinery and chemical related industries. In addition, many of these activities have links to local markets, e.g. food and drink processing or publishing. While not footloose per se these activities, or some mixture of them, locate throughout the urban system and are not as constrained in a locational sense as the larger enterprises more common in the remainder of the manufacturing sector. Table 2 suggests that the slow and continued decline of the dissimilarity index for ‘Other Manufacturing’ should be understood not only in terms of the explanation just offer, but also in light of the rapid spatial concentration of the ‘Machinery and Electrical Manufacturing sector’, which has partially resulted from the increasingly focused patterns of investment made in this sector, e.g. electronics in South Wales. Following this argument, the variations in spatial dispersal/concentration rates within the wider manufacturing sector could be interpreted as a reflection of the different spatial sources of investment. For example, areas attracting FDI would probably do so in specific sectors and would therefore become more specialized than areas relying on more localized forms of investment. The evidence from Table 2 fits well with expectations on theoretical grounds and is fairly clear regarding the changing spatial character of activities across the urban system but the question remains, how do these changes at a system level impact local places? One way of gaining some more information surrounding the likely impacts of these changes is to briefly examine Table 3, which highlights the correlation of individual sectors with the rate of employment growth and the size of the workforce for the 150 TTWAs under analysis. It is clear from Table 3 that there are some very strong relationships between employment in sectors and the size of the workforce, a surrogate for city size in this instance. The 12 sectors with positive correlations (all [0.479) are all service-based sectors. Thus services, and in particular those accounting for the largest employment shares across the system are most heavily correlated with larger urban centres. In contrast, all of the manufacturing sectors and the primary activities are negatively correlated with city size. Thus indicating the greater likelihood that manufacturing has greater employment share as one moves down the urban hierarchy. Those service sectors – Communications, Government and Utilities – that are negatively correlated with size, as we
Sectoral Employment Structures in the British Urban System, 1991–2001 Table 3. Sectors correlated with growth and size
Sector Advanced Producer Services Hotel and Catering Personal and Domestic Retail Culture and Recreation Fire, Insurance, Real Estate Education Other Services Wholesale Health and Social Work Transportation Construction Communications Mineral and Extraction Other Manufacturing Chemical and Plastic Ores and Metal Machine and Electrical Government Utilities
Employment growth, Workforce size, 1991–2001 2001 0.167
0.178
0.173 0.230 0.271 0.304 0.251
0.174
0.977 0.972 0.966 0.957 0.945 0.928 0.886 0.865 0.841 0.500 0.479 0.453 ñ0.230 ñ0.267 ñ0.428 ñ0.518 ñ0.605 ñ0.607 ñ0.794 ñ0.877
Note: Only significant levels of r are indicated.
have already noted, have undergone rationalization and centralization after privatization accompanied by spatial concentration, obviously into the smaller centres in the urban system. In the case of Government it is likely that this negative correlation is due to employment shares in Local Authorities being higher in the smaller centres throughout the urban system, but may also be linked to central policies for the dispersal of government activities and offices away from the largest centres. In terms of Employment Growth, while statistically significant, the correlations with most sectors are rather weak. The sectors that perhaps are of most interest are APS and Retail, which indicates how the growth of these sectors has played a role in urban growth generally in the recent past. Not surprisingly, Construction is related to growth in employment – areas with expanding populations need new housing and growing cities need new infrastructural development. The correlation of employment growth to Transportation, Wholesale and Education is again not unexpected. The former two sectors usually have nodal locations whereby ease of access is a dominant characteristic and it is not unusual to expect these nodal locations to grow, particularly in the case of air transport where only the largest centres in the system become nodal points. Education is often linked to growth particularly when dealing with the notion of highly skilled workforces and the modern informational economy into which we are moving, this is somewhat at odds with the dispersal tendencies of Education employment found earlier. The location of universities and higher-level centres of education are likely to attract employers and thus indicate the likelihood for growth in the urban system.
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What appears to be happening is that there is duality occurring whereby there is a dispersal of activity down the hierarchy while there is a simultaneous concentration of educational employment share amongst the most rapidly growing centres. This would appear to vindicate the importance of education and skills in relation to growth espoused by so many in the literature. The final two sectors that correlate positively and significantly with employment growth – Mineral Extraction and Ores and Metal Manufacturing – are not as easily explained. The most obvious explanation is that there has been a rebound by TTWAs which have high employment levels in these sectors after the losses of the 1980s, remembering that the growth of employment is not explained by these sectors, it is just that there has been employment growth in TTWAs where these sectors have a high profile. Based on the evidence above it should become apparent that there are a number of sectoral characteristics and tendencies at a systems level one must consider if one is to understand the particularities of the sectoral composition of individual places. One way to identify the extent to which individual places are specialized or diverse is to analyse the variation of their employment profiles from the system profile at selected points in time. The remainder of the paper will focus on these variations. Diversification and specialization in the urban system Familiarization with employment structures in every TTWA of the urban system is not a goal of this paper, however to achieve a full understanding and feel for the data and to provide insights into the type of places which have either very diverse or specialized structures it would seem prudent to highlight some of these places. Table 4 identifies the ten most diverse and specialized TTWAs in the urban system in 2001 and the associated Gini coefficients of specialization. It becomes clear that those places that are most diverse have profiles very like that of the systemic profile. The most diverse TTWA, with a Gini of 0.062 representing a small deviation from the system profile of employment, is Medway/Maidstone, not surprising when one considers the polycentric nature of this large TTWA. In contrast, the most specialized TTWA in the urban system – Alfreton and Ashfield has a Gini coefficient of 0.337 – thus demonstrating a large deviation from the system profile. Further analysis of Table 4 would appear to suggest that the more diverse places have a tendency to be larger in size while the most specialized employment structures are found in relatively smaller centres by comparison. More striking is that the most specialized places, with the exception of Blackpool, would appear to be very specialized based on their traditional high levels of employment in either the primary and secondary sectors. While interesting in themselves, as mentioned above, it is not the purpose of the paper to
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Gini
TTWA
Gini
Medway/Maidstone Colchester Manchester Nottingham Northampton Lanarkshire Hull Leeds Glasgow Chelmsford/Braintree
0.062 0.064 0.066 0.079 0.080 0.081 0.084 0.085 0.087 0.090
Blackpool Grimsby Wellingborough/Rushden Kidderminster Yeovil Accrington/Rossendale Pontypool/Cwmbran Blackburn Neath/Port Talbot Alfreton/Ashfield
0.256 0.257 0.257 0.259 0.269 0.277 0.282 0.289 0.292 0.337
investigate each individual TTWA in the system, rather it is to ascertain to what extent the employment structures and characteristics of the TTWAs that constitute the urban system are changing in unison. In order to deal with this issue one can look at the specialized and diversified nature of places from a variety of angles. Another approach, one that has been investigated by numerous researchers in the past, is to examine the relationship between city size and level of specialization. As previously discussed here, and in the literature, there are a number of reasons why this might be expected. However, S (2003) has recently intimated that this relationship is linked to innovation and aspects of the incubator model described by Chinitz in the 1960s. If one correlates the Gini coefficient for each TTWA with the size of the workforce, ró–0.208 is found, which represents a relatively weak and negative, but statistically significant relationship and then suggests as city size increases, places become less specialized. The relationship between size and specialization, or alternatively diversity, becomes much more apparent if one aggregates the data according to city size ranges as in Table 5. If one excludes the London TTWA there is a distinct gradation of diversity level based on size, the relationship holds more or less true for both the 1991 and 2001 data. Smaller places have higher levels of the Gini coefficient, thus greater degrees of specialization supporting a suggestion that there is a clear separation between the centre and peripheral areas in the UK (MC, 2001). However, if one examines the rate at which the level of specialization changed from 1991 to 2001, or the diversification rate, it becomes clear
that the largest TTWAs (those with workforces [300 000) had Gini coefficients that were increasing, i.e. they were becoming more specialized albeit from a relative position of diversity, while smaller, typically more specialized, places in general had profiles which were becoming more diverse, i.e. more like the system profile. Two other important trends can be identified from Table 5; those places with the greatest rate of diversification fell into the 50 000–70 000 workforce size and, the slowest rate of growth in the size of the workforce was in the 28 000–50 000 size range. What one must conclude from the evidence here is that the rate of growth of the workforce has little to do with the sectors in which that growth takes place. In the larger cities, the growing workforce leads to increased specialization of the sectoral composition while in the smaller cities similar rates of growth lead to a diversification. This is indicative of underlying differences, based on size and relative location, in the nature and character of cities and their employment structures. One final consideration in relation to levels of diversity or specialization across the urban system is to determine whether there are any specific regional patterns to employment structures. As has been demonstrated above each sector has its own tendency towards either dispersal or concentration, if these tendencies are place-related then the expectation is that regional variations in employment structure might occur. Table 6 identifies the mean workforce size of the TTWAs in each standard region of Britain, the regional Gini coefficients for 1991 and 2001 as well as the regional rates of change in that coefficient. It illustrates that
Table 5. Employment, change, degree and rate of diversification/specialization N
Size range
Work, 2001
Work, 1991
1991–2001 (%)
Gini, 1991
Gini, 2001
Diversification rate, 1991–2001
1 11 14 33 22 38 31
London P300 000 200 000–299 999 100 000–199 999 70 000–99 999 50 000–69 999 28 000–49 999
3 539 017 490 614 231 252 144 748 82 917 59 871 41 649
2 877 378 414 505 196 101 121 357 70 790 50 750 38 143
23.0 18.2 18.7 20.6 17.4 18.9 9.9
0.150 0.109 0.156 0.155 0.180 0.229 0.231
0.169 0.123 0.151 0.153 0.172 0.204 0.222
10.7 4.9 ñ5.3 ñ4.6 ñ8.4 ñ13.8 ñ5.4
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Table 6. Regional Gini coefficients and diversification rates Region
N
1991 AES
2001 ABI
Regional diversification rate
Work, 2001
Wales London (including Heathrow) North South West West Midlands York and Humber North West East Midlands East Anglia Scotland South East
10 2 11 17 14 15 18 11 7 14 31
0.184 0.163 0.204 0.196 0.200 0.195 0.192 0.213 0.161 0.191 0.175
0.209 0.199 0.198 0.184 0.184 0.183 0.182 0.182 0.180 0.173 0.162
13.4 22.2 ñ2.7 ñ6.0 ñ8.0 ñ6.0 ñ4.9 ñ14.4 11.7 ñ9.4 ñ7.8
76 724 2 176 446 88 739 90 790 155 733 123 643 146 020 114 616 98 068 129 797 137 840
Notes: ABI, Annual Business Inquiry; AES, Annual Employment Survey. Positive diversification rate ó specialization.
there are limited regional variations with Wales having the most specialized employment structures in 2001 and the South East exhibiting the most diversified structures, however the variation from the least to most specialized is quite small. More importantly perhaps are the rates of change in diversity level – the TTWAs of London, Wales and East Anglia becoming more specialized than those of the other regions which display regional tendencies towards a more diverse mix of employment. What becomes clear from this table is that the London region is quite specialized now compared to most of the other regions and is becoming more specialized. The most likely explanation for the lack of clear regional patterns is that in each region there is a distribution of city sizes representing the whole regional hierarchy and as we have seen that there is a link between size and employment structures whatever regional variations do exist are to some extent masked. It is clearly a geographical issue of scale suggesting that the region is not the most suitable entity at which to examine employment structure variations. Perhaps each level of the urban hierarchy needs to be analysed independently before a regional component can be clearly seen. The previous sections have each identified a series of trends relating to the employment structures of cities and their characteristic levels of diversity. Levels and changing patterns of employment by sector across the urban system have been presented. Trends in individual sectors have been explored to identify spatial tendencies, while the links between specific sectors with size and growth have been assessed. Cities with the most specialized and diverse profiles have been highlighted along with a brief evaluation of regional patterns. In their own way, each of these pieces of the puzzle seems to indicate a transformation within the urban system. Evidence from sectoral growth, dispersion, and the relationship between city size and growth all seem to indicate that some sectors are acting as forces for convergence while others may be having the opposite effect on different parts of the system. The following
section will investigate the extent to which changes in individual sectors and places are acting in such a way as to bring about a convergence or divergence of employment structures across the urban system. Convergence and divergence in the urban system Convergence across the urban system assumes that the employment structures of places are becoming more alike. For this to be observed their employment structures must reflect wider systemic change and all places should be exhibiting similar tendencies across most sectors. In contrast, for divergence to be observed employment structures should become less alike. This implies there should be specialization occurring, but this specialization must occur differentially otherwise places would merely be converging towards some new specialized structure. The evidence from the growth of employment in specific sectors, particularly some of the tertiary sectors of the economy, and their tendency to be more dispersed in space would suggest that convergence is to be expected. However, as some service sectors take on a more basic role, or are more widely traded (P, 2003) and account for increasing levels of employment in some cities it might be expected that these places are differentiating themselves from the remainder of the urban system. Indeed this was found to be the case for the British urban system from 1978 to 1991 (O’D, 2000). Other studies also noted a divergence amongst places throughout the 1980s (D et al., 1996, inter alia), roughly the same period, although these studies did not examine employment structures specifically. It was thought at the time that these trends may have been the result of the economic cycle and the massive restructuring, particularly of manufacturing, throughout the developed western economies over this period of time and that a convergence would soon resume once this process was concluded. Given the continued rapid increase in service employment and increasing levels of female participation, particularly in those sectors that
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were seen to have the greatest tendencies towards dispersal, it was assumed that convergence would soon reaffirm itself as the dominant trend. However, the indications from previous research, and implied in much of the recent literature, is that perhaps both trends were occurring simultaneously depending upon what part of the urban system was put under the microscope. The remainder of this paper will examine whether there has been a convergence or divergence of employment structures throughout the 1990s up until 2001 in urban Britain. A number of simple measures are used to identify whether there has been a convergence or divergence of employment structure, each of which have been used in previous research. First, the Gini coefficient is used. If there is to be convergence of the urban system, places should be approaching a similar employment structure. As the Gini coefficient is based on the urban system profile, the use of the mean value of the coefficient for all the TTWAs in the system will indicate whether this value is approaching or moving away from the system profile. A move towards the system profile will be evidenced by a decrease in the mean Gini coefficient for the system as a whole. Second, the deviation of the Gini coefficient needs to be assessed. If convergence is to be identified then the variation around the mean Gini coefficient should decline. Not only will places approach the system profile, but also their individual deviations from that profile will get smaller – a clear sign that employment structures are moving towards lesser variations from the profile. Finally, the coefficient of variation is used. This measure evaluates the extent to which the standard deviation accounts for a percentage of the mean values it is bounding. As the coefficient of variation declines it demonstrates that variability of the data set is declining, thus representing a convergence of employment structure. Conversely increasing mean
Gini coefficients, standard deviations and coefficients of variation would all point towards a divergence of employment structures as increasing specialization across the system was leading to more variability between places. Table 7 highlights this data for the British urban system from 1991 to 2001, including data for the intermediate years of 1995 and 1998. There are good reasons to believe that convergence might be occurring and if one tests the concept that there is a convergence across the urban system then it appears that this may be case, although the evidence is not particularly strong. Examining the data for the collective urban system of 150 TTWAs one finds a slight reduction in the Gini coefficient from 1991 to 2001, accompanied by a reduction in its Mean standard deviation, but only from 1998 to 2001. The coefficient of variation also indicates a convergence from 1995 to 2001. None of these trends is particularly strong and probably represents the varied nature of all city sizes and specializations across the system. It was shown above that city size played a distinct role in understanding the extent of diversity or specialization amongst cities. Turning attention to the largest places in the system, those already identified as having somewhat different tendencies in terms of rates of change of employment structure and increasing specialization (Table 5), it becomes apparent that a different process can be observed. The mean level of specialization for these places has risen steadily over the 10 years; this has been accompanied by an increased level of variation about the mean level of specialization and also an increase in the coefficient of variation. The latter two measure experiencing a brief break in trend in 1998 but resumed again by 2001. The clear evidence in this case from Table 7 is that there is a divergence of employment structures, albeit from a relatively diverse profile to begin with. This suggests that the trend
Table 7. Measures of convergence or divergence 1991 AES
1995 AES
1998 ABI
2001 ABI
150 TTWAs – the urban system Mean Gini Mean standard deviation of Gini Coefficient of variation
0.190 0.063 0.334
0.185 0.062 0.337
0.189 0.062 0.325
0.181 0.052 0.290
12 TTWAs workforce [300 000 Mean Gini Mean standard deviation of Gini Coefficient of variation
0.113 0.032 0.286
0.118 0.042 0.354
0.127 0.041 0.322
0.127 0.050 0.398
10 TTWAs [300 000 (excluding London) Mean Gini Mean standard deviation of Gini Coefficient of variation
0.103 0.024 0.234
0.104 0.027 0.264
0.116 0.033 0.287
0.112 0.039 0.347
138 TTWAs O300 000 Mean Gini Mean standard deviation of Gini Coefficient of variation
0.197 0.061 0.311
0.191 0.061 0.316
0.195 0.060 0.309
0.185 0.050 0.270
Notes: ABI, Annual Business Inquiry; AES, Annual Employment Survey; TTWAs, travel-to-work areas.
Sectoral Employment Structures in the British Urban System, 1991–2001 towards divergence found amongst larger places in the 1980s is not merely a unique occurrence but rather an ongoing tendency throughout the 1990s. To make sure this is not a result of the influence of London and its rather unique profile in the UK due to its global city status, it was felt important to remove the London and Heathrow TTWAs, which constitute an area that corresponds closely with what is generally referred to as Greater London, from the analysis. Investigation of the data for the ten TTWAs with workforces [300 000 (approximately 500 000 population range) excluding London identifies even more clearly the extent to which there has been a continuous divergence of employment structure amongst the larger urban centres. These places are becoming more specialized with greater levels of deviation from that level of specialization. This is borne out by all the figures. As divergence is found amongst the larger places they must be separated from the remainder of the data set so that the trend for the rest of the urban system can be identified. The final rows of Table 7 indicate more or less the same trends for the urban system excluding the places with workforces [300 000 as the system collectively. The values are somewhat different but the trend is identical, somewhat weak evidence for convergence, with the trend strengthening from 1998 to 2001. Examining these trends at a regional level was not considered appropriate given the vast differences in city size between places. The regional component of the analysis has therefore been confined to the discussion surrounding Table 6. It would seem that evidence found from 1978 to 1991 has been replicated in the 1991 to 2001 period. While the majority of TTWAs within the urban system are moving in parallel towards a more diverse, more similar profile, best explained by shifts towards more ubiquitous forms of service-based city economies, the larger places in the urban system are in many ways redefining themselves and distinguishing themselves from each other in more subtle ways than may have been the case in the past. Specializations in growing areas of the broadly defined service sectors, particularly in sectors which are traded and becoming spatially more focused, would appear to explain the tendency for the employment structures of the largest places to become less alike each other. While places are moving towards a service-based economy, they are not all are moving towards the same service based economy. Sources of differentiation between places still remain, and indeed the evidence suggests these new sources of variation are leading to greater varieties of employment structure in our largest cities. CONCLUSION This paper set out to establish what patterns of employment structure change occurred from 1991 to 2001 and to identify whether or not previously observed
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trends were unique. From the evidence collected, it was obvious that a number of changes were taking place in employment structures across all cities and in the spatial characteristics of the sectors themselves. These changes indicate that there has been an ongoing but weak process of convergence of employment structures across the urban system. Simultaneously there has been a divergence of employment structures among the largest cities in the urban system, similar to that found in the 1980s in Britain. Another issue to remember regarding this research is the absence of self-employed individuals from the data set. Studies of the geography of innovation and entrepreneurship indicate that most of this type of employment is likely to be concentrated in and around the largest population and commercial nodes in the country where specific niches in the urbanization economies need to be filled. It is also most likely that these individuals, absent from this data set, are employed in sectors that are growing. Given those two features along with the evidence already discussed, it is likely that the divergent trends found amongst the largest places are somewhat underestimated. While this cannot be proven the expectation is clearly based in the literature. The most probable reasons for the divergence amongst the larger cities are a movement of employment structures away from the system profile in specific directions linked to the emergence of new activities, innovations and skills leading to different city forms. The trend found amongst most of the urban system are replicated but magnified in some sectors in the largest places so that the most rapidly growing sectors, and those which have specific spatial characteristics, have a differential influence on the largest centres as they emerge as centres of consumption, information, circulation and entertainment. Future research should be able to provide evidence that reinforces these trends perhaps identifying the occupational structure change or the role of the self-employed. The evidence points to ongoing specialization in the upper end of the urban system hierarchy. This to some extent counters the general wisdom and literature that the largest places should be the most diverse in employment structure. It is important to identify why these patterns of employment differentiation have differential spatial characteristics. It is these very kinds of spatial variations in economy that have attracted the attention of the proponents of the ‘new geographical economics’ and their search for explanation. There is little doubt that much of the new variation to emerge will be linked to specificities within the labour market linked to places, activities, skills and technologies. Other factors such as institutional arrangements, economic agents and path dependency along with the role of specific and relative location also need to be considered. There are very obvious implications for labour market policies inherent in these findings. If indeed larger cities are taking on new roles and continue to have employment structures that are
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very different or divergent from other types of urban places then policy-makers need to monitor these changes and offer adaptations accordingly. There is plenty of room for further research in this field that tries to link the performance and character of city employment structures to wider changes in technology, economy and society. These avenues must be explored in light of the findings herein as further studies of these types of change are the only way to truly comprehend the what, where, how and why of urban Britain.
Acknowledgements – The authors thank The Foundation for Canadian Studies, UK, for a travel grant that assisted in the collaboration between the two authors. They also thank Canterbury Christ Church University College for appointing I. J. T. as a Visiting Research Fellow and for the provision of a Research School Small Research Grant.
NOTES 1. Employment structure is used in the same sense as by C and A (1994). 2. The term ‘dispersed’ is used in a geographical sense and should not be confused with dispersal as described by MC (2001, p. 66).
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