Social Mobility and Dynamism Index

Overview

Project Description: The Social Mobility Commission (SMC) monitors progress towards improving social mobility in the UK and promotes social mobility in England. It is an independent statutory body created by an Act of Parliament. The SMC is interested in conducting research to understand how levels of dynamism and innovation vary across the UK. Our desire to produce this stems from a commitment that we made in our EGIG Report, which explored innovation, investment and renewal across the UK. Background: The UK is one of the most regionally unequal economies in the developed world. Productivity in Greater Manchester is 35% below that of London. Closing the productivity gap between Manchester and London to that observed between Lyon and Paris would increase total Gross Value Added (GVA) by £13 billion a year (in 2019 prices), a 0.7 per cent boost to national productivity. In East Yorkshire, the odds of climbing the income ladder are far lower than in Surrey or Sussex. While opportunities for high paying, good careers are largely concentrated in London. If we want a society where talent and effort are rewarded, these cycles must be broken. Business and economic dynamism is central to this task. Dynamic economies are more productive, have greater growth, and higher wages. They also have greater levels of social mobility, discussed next. The definition of "dynamism": For the purposes of this work, "economic dynamism" is defined as the rate of structural change, fluidity, and renewal within an economy. It is distinct from simple economic growth or historical wealth. A dynamic economy is characterised by creative destruction - the continuous churn of business creation and closure, the rapid reallocation of labour to more productive uses, and the physical and demographic capacity to absorb new ideas and talent. The resulting index must measure this velocity and fluidity, identifying which areas of the UK present the fewest structural barriers to new entrants, innovators, and workers seeking upward mobility. Objectives The objectives of this research are to: 1. Generate a single score Social Mobility and Dynamism Index, improving on the US Index of State Dynamism. This should include similar indicators as the US index including core startup rate, share of workers at firms less than five years old, growth in total firms, unique inventors per 1,000 residents, housing permits per 1,000 residents, reallocation rate, labour force participation rate, and migration rate. However, the Commission is open to include other measures, including but not limited to: Moving average of births and deaths of firms as a % of active firms over the last 5 years; Moving average of housing completions per 1000 residents over the last 5 years; Time-series regression slope of ONS APS labour-force participation rate; Moving average of internal net and international net inward migration over the last 5 years; Moving average of the share of firms aged 5 and under over the last 5 years; Moving average of jobs created plus jobs destroyed, divided by work-age population; Time-series regression slope of proportion of adults with Level 4+ qualifications; Time-series regression slope of GVA per head. Other metrics that should be considered include the Commission's Promising Prospects (PP) composite index. The PP index measures how well young people from similar socio-economic backgrounds do in education and the labour market, and is used in the SMC's annual State of the Nation publication. It is also available as an interactive dashboard on the SMC website. The Social Mobility and Dynamism Index should be available at different spatial levels such as Local Authority, Mayoral Combined Authority/Mayoral Strategic Authority, ITL3, and ITL1. It should also be interactive and allows users to understand how each of the components of the index interact and influence each other. The index should allow us to better understand how specific strengths and/or weaknesses are related t