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A geography of unemployment in Vancouver CMA Daniels, Peter L. 1985

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A GEOGRAPHY OF UNEMPLOYMENT IN VANCOUVER C M A  by PETER L. DANIELS B.Sc (Hons.) Griffith University, Brisbane, AUSTRALIA.  A THESIS SUBMITTED  IN P A R T I A L F U L F I L M E N T O F  T H E REQUIREMENTS  FOR T H E D E G R E E O F  MASTER O F ARTS  in T H E F A C U L T Y O F G R A D U A T E STUDIES Department of Geography  We accept this thesis as conforming to the required standard  T H E UNIVERSITY  O F BRITISH C O L U M B I A  October 14, 1985  ®  PETER  L. DANIELS, 1985  In  presenting  degree  this  at the  thesis  in  partial  fulfilment  University of  British  Columbia,  freely available for reference and study. copying  of  department publication  this or of  thesis by  for scholarly  his  this thesis  or  her  Geography  The University of British Columbia 1956 Main Mall Vancouver, Canada V6T 1Y3 Date  14 October  the  I agree  requirements  for  may  representatives.  It  be is  1985  advanced  that the Library shall make it  I further agree that permission  purposes  an  granted  by the  understood  for extensive head  that  for financial gain shall not be allowed without  permission.  Department of  of  of  my  copying  or  my written  AM_£X Widespread  and  endemic in many socioeconomic  persistent  high  levels of unemployment  now  appear  to  "advanced" economies and are commonly recognized as the  problem  (with  staggering  direct  and  indirect  costs  on  be  major  society  and  individuals) to be confronted by policy and decision-makers in the incipient form of modern Western society. The province of British Columbia (B.C.) in Canada (which contains the principal study area (the Vancouver C.M.A)) lost over six percent of its employed workforce over the two years between July 1982 and July 1984 and currently (in 1985) has the second highest unemployment rate in the nation with levels well above the OEGD average. This  study  comprises  an  attempt  to  identify  the  nature  and  causes  of  unemployment in 1981 in the major metropolitan area in B.C. (the Vancouver C M A ) , in addition to an assessment of changes in the characteristics of unemployment during the  economic  downturn  that  has  vexed  the  province  since  1981.  The  research  methodology is sharply divided into a specific focus on the nature of unemployment, and in particular, the processes underlying intra-urban variations in unemployment rates within the Vancouver C M A on one hand, and a more general analysis of regional trends over the  1970's in one major  relevant economic sector (the  goods-production  industries) on the other. Unfortunately, significant problems are faced in the use of data restricted to the exceptionally low unemployment census year of 1981 and  the  scope of the investigation is necessarily modest given the complexity of the problem and the resources available. The urban level analysis is basically a series of tests (including the regression and correlation of aggregated relevance  of  the  two  and individual social and spatial data) to ascertain  major  hypotheses  of  intra-urban  spatial  variations  the in  unemployment The "trapped" hypothesis stresses the role of space as a direct influence on  unemployment  probability (often  as  a perceived joint  ii  result  of confinement  to  certain  housing  locations  within  the  city  and  the  suburbanization  of  industrial  employment demand). The alternative hypothesis explains the pattern of unemployment rates  in  terms  of  the  concentration  of  unemployment  upon  workers  with  certain  socioeconomic characteristics who occupy geographically distinct sections of the housing market From  the  research  results,  the  role  of  space  in  the  determination  of  unemployment probability, within the C M A , appears to be limited. However, there is some evidence that personal having some  effect  separation  between  important  for  on  characteristics and spatial effects  expected  unemployment  rates and  may be simultaneously  a consideration of spatial  labour supply and demand,- even within- the- C M A , may well be  labour  market  theory  and  policy.  Hence,  the  C M A cannot  be  unequivocally adopted as the appropriate local labour market for all groups of people (divided on the basis of their socioeconomic characteristics and location) in the C M A . The  detailed  suggested times,  of  the the  analysis  of  the  personal  high-unemployment lower-skilled  and  characteristics  of  the  probability, in low and the  occupations  with  unemployed  high the  has  employment  higher  also  demand  proportions  of  low-skilled workers (generally the manual blue-collar and service occupations! A  preliminary analysis of trends in manufacturing  production  sector  changes  throughout the 1970's (at the B.C. regional scale) has been completed as a result of the  perceived inadequacy  manufacturing demand,  the  production  of the sector  goods-production  urban has  level  meant  industries  have  focus.  only been  a  Although partial the  a  resolution  analysis  central  area  of  on  the  employment  of focus. This  sector has been specifically selected in view of a number of restrictions (including data availability and overall research resource constraints) and in order to test the relevance, in the B.C. context, of some of the processes hypothesized in the literature produced by the prolific radical geographers. Unemployment and production activities are usually important aspects of radical theory on the relation between labour and the restructuring  iii  of capitalism. The empirical research for this second section is essentially a simple comparison of  some major  output  in  structural  1971  classification)  and  within  hypothesized by the prohibitive toward  and  the  period  1981  at  three  of manufacturing geographic  scales  production employment and (based  on  a  core-periphery  the province. Although there is little evidence of the processes radical geography  conclusions reduced  capital-intensification demand;  characteristics  demand  in  together with  remain  the the  tentative. for  face  school, the methodological problems faced  of  direct effect  There  production  is, however, labour  international  a  input  competition  and  of reduced- output' demand  are  distinctive trend With  continued  reduced  world  in an historical  that appears to involve a rather dramatic redefinition of B.C.'s role in the  world economy, the unemployment problem is unlikely to be substantially reduced in the  forseeable  growing,  future  without  labour-intensive  a  service  major  absorption  industries.  of  "Full"  displaced labour employment  contemporary mode, will probably be ineffectual in the B.C. setting.  iv  into rapidly  policy  in  the  Acknowledgements The  size  of this  thesis  mirrors the  academic  and  emotional support,  from  faculty, family and friends, that has enabled its completion. From my supervisor, Dr. Ken Denike, the inspiration, guidance, generosity, and understanding has been invaluable and will long be remembered. Without question, Dr. David Ley's knowledge, concern, and  clarity  have  been  of  immeasurable  worth  in  the  latter  stages of  the  thesis  development Raymon Torchinsky, who must be the most frequently mentioned individual in U B C Geography thesis acknowledgements, has won another  forever-indebted fan as a  result of his selfless and endless devotion to ameliorating the problems and despairs of distraught thesis writers. To John Butcher, the pain of this thesis has been lightened by your friendship and mirth. My family, so far away, have fuelled me with continuous love and motivation but  I  dedicate  this  thesis  reassuring comfort and  and  empathy,  an  ocean  of  never-ending  thanks  my beloved  love and patience  effort dedicated towards the preparation of this thesis.  v  to  Jan  and the  for  her  time and  Tahle of Contents I. Introduction  1  II. The Neoclassical Conception of the Labour Market A.  B.  C.  D.  15  The Demand and Supply for Labour in Competitive Markets  17  1.  The demand for labour  18  2.  The supply of labour  21  3.  The interaction of supply and demand for labour  25  Constraints on the Perfect Operation Recognized by Neoclassical Theorists  of  the  Labour  Market 28  1.  Noncompetitive buyers of labour  28  2.  Noncompetitive sellers of labour  33  3.  Occupational constraints  36  4.  Informational barriers  37  5.  Geographic separation of supply and demand opportunities  38  Unemployment  39  1.  The unemployables  41  2.  Seasonal unemployment  42  3.  Frictional unemployment  42  4.  Structural unemployment  42  5.  Demand-deficient (cyclical) unemployment  44  Macroeconomics, Labour Economics and Unemployment  45  III. The Social and Spatial Structures as Barriers to the Perfect Operation of the Labour Market  48  A.  Heterogeneity in the Supply of, and Demand for, Labour  48  1.  Internal and external labour markets  49  2.  The dual labour market  50  B.  Space as an Intervening Variable between of Labour Supply and Demand 1. Weberian industrial location theory  vi  the Equilibrium Matching 53 54  C.  2.  Critiques of Weberian location theory on labour  57  3.  Do "Jobs Follow People" ?  60  The Concept of a the Study Area  "Local"  Labour Market -  Vancouver C M A as 63  IV. Analyses of Intra-Urban Spatial Variations in Unemployment A. B.  The Changing Unemployment  Spatial  Structure  of  Industry  as  69 a  Cause  of 71  Intra-urban Unemployment Differentials from Personal  Characteristics  of the Residential Labour Supply  78  V. The Decentralization of Industry in the Vancouver C M A A.  B.  84  The Process of Decentralization  84  1.  84  General trends  2. The centrifugal forces underlying decentralization Intra-Metropolitan Decentralization - The Changing Industry in the Vancouver C M A  87 Geography .'.  of  VI. R A D I C A L INTERPRETATIONS: T H E R E S T R U C T U R I N G O F CAPITAL A N D THE LABOUR M A R K E T A.  B. C.  D.  The Radical Critique of the Neoclassical Labour Market  89 99 102  1.  The mechanistic, anti-humanist nature of neoclassical approaches ....102  2.  The ideological nature of neoclassical economics  3.  Static and narrow conceptions of the economic system  4.  Equal and free choice in labour market supply decisions  113  5.  The value of labour  115  The Relationship between Space  Social Processes  and the  105 -107  Organization of 121  The Restructuring of Capital and the Spatial Structure of Industrial Activity  125  1.  Strategies which are not directly spatial in character  128  2.  Strategies which are directly spatial in character  139  Limitations of Radical Theories on the Restructuring of Capital and the Labour Market  vii  148  E.  The Restructuring of Capital and the Geography of Unemployment  152  VII. M E T H O D O L O G Y A.  The Urban Analysis of Unemployment in the Vancouver C M A  159  1.  Description of unemployment distribution in 1981  159  2.  Change in the over time  164  geographic  distribution of C M A unemployment  3.  The residential relocation of manufacturing production employees  4.  Geographic variation in umemployment production versus other occupations  5. 6.  7.  8. B.  157  The relationship between unemployment rates  rates for  manufacturing 170  census tract car ownership levels and 171  The relationship between census tract unemployment rates, travel time to the C B D , and socioeconomic characteristics of the census tract population  172  Characteristics" of the unemployed in Vancouver C M A and the relationship between socioeconomic and housing characteristics of the labour force ;  183  Comparison of C M A and British Columbian unemployment levels' for occupations  186  The Regional Analysis of Spatial and Structural Manufacturing Production Activity Employment Demand  Changes  1.  structure of  2.  ....167  General trends in industry in B.C  the  spatial  and  organizational  in 187 189  A more detailed look at structural changes relevance of radical theory in the B.C. context  and  testing  the 191  VIII. Results of the Urban Analysis of Unemployment A.  Unemployment in Vancouver C M A 1981  B.  Changes in the Pattern Study Area  of Unemployment in the  200 ...200 Vancouver C M A 207  C.  The Suburbanization of the Manufacturing Production Labour Force  213  D.  Comparison of Intra-Urban Variations in Unemployment Manufacturing Production Workers with Other Occupations  220  Rates of  E.  Car Ownership Findings  223  F.  Results of the Regression Analysis of Total CT Unemployment Rates 1981  225  viii  I  G.  H.  1.  Stepwise regression of selected personal characteristic variables and travel time to the C B D , on total 1981 unemployment rates ....226  2.  Regression analyses with indices of accessibility to production employment zones  manufacturing 237  Characteristics of the Unemployed in Vancouver C M A and the Relationship between the Housing Market and the Socioeconomic Characteristics of the C T Labour Force  244  Occupational Unemployment in British Columbia  261  IX. Structural and Locational Changes in Manufacturing Production Activity in British Columbia A. B.  C.  General Trends Columbia  in  Manufacturing  Production  Activity  in  266  British 266  Spatial Changes in British Columbias Manufacturing Production Output, Employment, Capital-Intensity and Wages 1971-81  276  1.  Capital intensification in the core  276  2.  Capital intensification allowing decentralization  287  3.  The relative decentralization of industry to low cost labour areas -..292  4.  The relative decentralization of industrial activity to break the bilateral relations between labour and capital  Review of Findings  302 305  X . Discussion of the Urban and Regional Analysis and Implications Unemployment in the Vancouver C M A and British Columbia  for  310  A.  Evaluation of the Urban Analysis  310  B.  Regional Structural Changes in Manufacturing Production Activity and Prospects for Reduced Unemployment in the Province  329  XI. Conclusion  342  BIBLIOGRAPHY  361  APPENDIX A  374  APPENDIX B  378  APPENDIX C  381  ix  Title  Unemployment  in Canada (Annual Average)  1921 to 1984 and Unemployment  in O E C D  Nations Annual. Average 1955 to 1981 Unemployment  Rates  for  Canada,  British  Columbia, and Vancouver C M A 1971-1985 Unemployment  Insurance  and  Welfare  Claims in British Columbia 1981-1985 The  Labour  Market  in  the  Classical  Economic Model The  Firm  and  Industry  Level  Labour  Demand Curves Under Perfect Competition Utility Maxmization:Work Utility MaximzatiomNo Work Utility Maximization and Hoursof Work The  Income  and  Substitution  Effects  and  the Supply Curve for Labour Labour Market Equilibrium The  Competitive  Demand  and  Monopolistic  Labour  Schedules  Comparison of Competitive and Monopolistic Labour Markets  Title  The  Effect  of Wage  Setting  Contracts by  Unions Effect of Supply Limitations by Unions Minimum  Wage  Legislation  Effect  on  the  Labour Effect The Effect of a Cheap-Labour Location on the  Transport  Cost  Optimum  Location  in  The Assumed Labour Market Conditions  at  the WeberiaiT^Model  Location "O" and Location " L " in Weber's Model Occupational  Composition '  Unemployment  of  Total  and  Occupational  (Labour  Force-Employed)  Unemployment Rates Unemployment  Comparison Ascending the Occupational-Skill Ladder Manufacturing  Output  Value-Added  in  British Columbia, Vancouver C M A , and  the  Vancouver "Core" Area 1965-1981 Manufacturing Trends  in  CMA,  and  1965-1981  Production British  Employment  Columbia,  Vancouver  Vancouver  "Core"  Area  Title  Productivity Vancouver  Trends  in  British  C M A , and  Columbia,  Vancouver  "Core"  Area 1965-1981 Capital-Intensity  Trends in Manufacturing in  British Columbia, Vancouver C M A , and  the  Vancouver "Core" Area 1965-1981 Hourly  Wage  Vancouver  Trends in British Columbia,  ^ M A , and  Vancouver  "Core"  Area 1965-1981 Manufacturing Exports from B.C., Percentage of  Provincial  Exports,  and  GDP the  from  Ratio  of  Manufacturing Manufacturing  Shipments to GPP 1971-19.83 Occupational Shifts in the Employed Labour Force in Canada 1950-1983  List of Tables  Title  British  Columbia Corporate  Income The  Profits and Investment  1968-1983  Occupational  Composition  of  Manufacturing  Activity for British Columbia 1981 Description Variables the  of and  1981  Major  Personal  Coefficients  Total  from  Unemployment  Characteristic  Correlation  with  Rate  for  each  Description  and  Census Tract Employment  Demand  CT  Weightings Used for Accessibility Indice Calculation Comparative Suburbanization Rates of Manufacturing Production and Other Workers Correlation Coefficients with Car Ownership Levels in Census Tracts (CAROWN) Regression  Results  for  the  Analysis of  Personal  Characteristics, Accessibility to the CBD, and Total Census CMA  Tract  Unemployment  Rates  in Vancouver  1981  Regression  Results  for  the  Analysis of  Personal  Characteristics, Accessibility Indices to Manufacturing Production  Employment  Zones  and  Total  Census  Tract Unemployment Rates in Vancouver C M A Unemployment Rates and the Composition of Total Unemployment (1980-1984)  xiii  by Occupation in Vancouver C M A  Tide  Occupational Composition of the  Inner and  Outer  Area of the C M A Labour Force Distribution of Provincial Manufacturing Output  and  Employment  Production  in Vancouver C M A and  "Core" Areas 1966 and 1981 Percentage Increase in Capital-Intensity  (1971-1981),  Percentage of Industry Output and Employment in the  Core, and Wage Rates by Industry 1971 and  1981 Estimated  Total  and  "Blue  Collar"  Unionization  Levels in Vancouver C M A and the Rest of B.C. Capital-Intensity  Levels for the Three Study Areas  in 1971 and 1981 Growth in Output and Employment for the Study Areas  Three  (1971-1981)  Capital-Intensification Decentralization  of  and Industries  the from  Relative the  "Core"  Areas Labour  Costs  (Wages)  as  a  Proportion  of Total  Manufacturing Production Costs Plant Size Comparison  Using Median Employment  Cohort Size (MECS) Measure for Selected Areas Plant  Size  Comparison  Using Average  Employees  Per Plant and Average Output Per Plant Measures -  Selected Areas 1981  xiv  List of Maps  Title  The  Distribution  Production  of  Value-Added  Manufacturing Vancouver  CMA  1964 and 1981 The  Distribution  Production  Employment  of  Manufacturing Vancouver  CMA  1964 and 1981 . Industrial Land Use 1955 Vancouver C M A Industrial  Land  Use  Change  1955-1983  Vancouver C M A Vancouver  C M A UIC  Statistical  Summary  Office Areas 1984 Major Manufacturing Production  Employment  Zones of the Vancouver C M A Vancouver C M A 1981 Unemployment  Rates  by CT Vancouver  CMA  Distribution  of  Unemployment in Absolute Terms Vancouver C M A 1961 Unemployment  Rates  by CT Vancouver C M A 1971 Unemployment by CT  xv  Rates  Title  1971 Residential Production CMA  Location of  Labour  within  Vancouver  1971  1981 Residential Production CMA  Force  Manufacturing  Location of  Labour  Force  Manufacturing  within  Vancouver  1981  Distribution of Labour  Force  with Trades,  University, or Non-University Certificate  or  Diploma Variation  in  Unemployment  Manufacturing  Rates  Production  for and  Non-Manufacturing Production Labour Force "Inner  City"  and  Suburban  Areas  Vancouver C M A 1980 and 1984 1981  Manufacturing  Unemployment  Rates  for Vancouver C M A at CT Level Definition  of  the  "Inner  City"  of  Low-Value  of  the  Vancouver C M A Distribution  Housing  Vancouver C M A 1984 Distribution of Labour Force with Education Below Secondary Certificate Percentage  of  Total  CT  Population  with  English as Mother Tongue Vancouver C M A 1981  Chapter I  INTRODUCTION Throughout socioeconomic  the  problem  1980's, at  unemployment  both  the  British  has  probably  become  Columbian provincial  federal levels. Recurrent prime coverage of unemployment-related  and  the the  major  Canadian  topics in the media  and public perception of the severity of this problem ratify the importance attributed to the unemployment problem amongst the host of social and economic ills faced in modern  life  in  isolated to the "advanced"  Canada.  1  Of  course,  the  unemployment  problem  Canadian context, but is a pervasive phenomenon  Western  economies.  The  persistently-  high  levels  is  by  no means  occurring in most of  unemployment  experienced in recent years have not been matched since the depression years of the 1930's (see F I G U R E 1.1 for a plot of annual average unemployment rates in Canada from  1921 to 1985). Unemployment is expected to exceed 34 million in the  OECD  nations by 1984 (Kuenstler, P. (1984) p.221). Perhaps associated  the  most disturbing aspect of the  rising unemployment  longer average duration of unemployment  experienced  levels is the  once a labour force  member enters the state of unemployment (Dicken, P. & Lloyd, P. (1981) p.150). In British Columbia, the average number of weeks spent unemployed jumped from 13.4 in 1976 to 24.9 in 1985 (Statistics Canada 71-529). Canada has traditionally had higher unemployment levels than Western Europe because  of  dispersed  markets  and  seasonality  and,  over  the  period  1965-75,  an  exceptionally rapid growth in the labour force (from demographic characteristics, changes in  participation  rates,  and  immigration policy)  (Jenness,  R.  (1977)  p.5).  However,  unemployment rates in Canada and the U.S. declined dramatically in the mid-1960's from large tax cuts in the U.S. and, in 1962, the devaluation of the Canadian dollar.  A Gallup Poll in mid-1984 found that 50% of Canadians interviewed felt that the most important problem, at a society-wide level, was unemployment Inflation was recorded as distant second (with only 27% of the poll vote) (Vancouver Sun (1984a)). :  1  2 Unemployment r a t e (%) Figure  I  :  1921  1  :  1.1  Unemployment i n Canada (Annual Average)  1  I  1931  1941  I  1951  I  I  1961  1971  I  1981 '85  Source: Compiled from S t a t i s t i c s Canada d a t a 71-001 "Labour Force Survey Group". This  was  Canada's  the  only period, since  target  for  national  the  early  1950's,  unemployment  that  levels  the  (3%)  Economic Council has  been  of  approached  (Employment and Immigration Canada (1981) p.10). From  the  mid  Vancouver C M A (the  to  late  1970's,  Canada,  British  Columbia  (B.C.)  and  the  primary study area), all had unemployment rates that hovered  around the six to eight percent level (see F I G U R E  1.2). Although a marked increase  in  all  unemployment  rates  after  1981  is  obvious  at  scales,  B.C. has  experienced  noticeably higher unemployment rates than the Canadian average levels and the C M A figures have usually "followed" the B.C. situation with rates about one percentage point below.  2  The rapid increase after  in unemployment in B.C. and the Vancouver C M A began  the exceptionally low unemployment resulting from the boom economic years in  the province, 1979-81. There was also a recessionary high unemployment period in the  Unemployment rates exclude "discouraged" workers and some researchers feel that the measure underestimates the actual incidence of unemployment or underemployment though, by definition, "discouraged" workers drop out of the labour force.  Figure  1.2  Unemployment Rates f o r Canada, B r i t i s h Columbia, and Vancouver 1971 - 1985  Unemployment Rate  B r i t i s h Columbia  18%  Vancouver CMA B.C.  Canada  16%  Vancouver  14% 12%  CMA  Canada  10% 8% 6% 4% 2% 0% 1971  1975  Source:  1977  S t a t i s t i c s Canada.  1979  1981  1983'84 1985 (Oct) (Jan)  Labour Force Annual A v e r a g e s . Labour Force Survey  71-001  71-529  Year  CMA  4 mid-1970's from the slowdown in economic growth, at a global scale, often  attributed  to  and  OPEC  supply-shock  after-effects unemployment mid-70's  of the  effects  world  Vietnam War on the  growth in the  period.  on  Between  (and  hence,  U.S. and world  B.C.)  demand  economies.  the  However, the  1980's, in B.C., has been far more severe than in the  July  1982  and  July  1984, B.C. lost  six percent  of  its  employed labour force (Regional Economic Services Branch (1984) p.5). By early 1985, the dismaying unemployment rates for Canada, B.C. and the Vancouver C M A stood at 11.0%, 16.5%, and 15.0% respectively. These unemployment statistics are derived from the usual source of the unemployment  rates -  Statistics Canada's 1  official  "Labour Force- Survey" (71-001). However,  the "Labour Force Survey" statistics are calculated monthly on the basis of less than a one percent sample seekers.  of housholds  The unemployment  accurate unemployment  examined.  problem in B.C. actually appears worse when  the  more  (U.I.) claimants  Available Income  for  Need)  and  2)  the  number  excluding seniors  of people' on  and the  GAIN  handicapped,  are  3  The  separate  contribution  of  U.I. claimants  combined total unemployment is shown in F I G U R E sets are  and full-time work  totals (and hence rates) derived by adding 1) the number of  Unemployment Insurance (Guaranteed  and include both part-time  only comparable  and  GAIN  recipients  1.3. Unfortunately, the  at B.C. level. The plot in F I G U R E  to  the  two data  1.3 indicates that, in  February 1985, almost one-quarter of B.C.'s labour force is unemployed and in receipt of unemployment benefits or some kind of work-related welfare. The actual number of unemployed  could be  higher  as  those persons  who  do  not  receive  benefit  whilst  unemployed (which could be a substantial number for certain groups in the population, such as the unemployed youth) are excluded.  The statistics on G A I N recipients (after 1983) from the B.C. Ministry of Human Resources (M.H.R.) are confidential and have not been released publicly (for reasons unknown) and have been issued by special permission of the M.H.R.  3  Figure  1.3  No. o f recipients  Unemployment in June  Insurance British  and  Welfare  Claims  Columbia  1981 - F e b r u a r y 1985 24. 5°*  350 000  T o t a l number o f u n e m p l o y e d receiving financial support  22.6% 300 000  250 0 0 0 UIC  Claimants  15 .2%, 200 000  150 0 0 0  9.5%  100 0 0 0  Feb. 1985 Source:  Employment and I m m i g r a t i o n Canada vP8840 " U . I . C l a i m a n t Summary S t a t i s t i c s " . 1980-1984 M i n i s t r y o f Human R e s o u r c e s - ( B . C . ) Annual Reports f o r 1 9 S 1 - 8 2 a n d - 1 9 8 2 - 8 3 a n d more r e c e n t d a t a made available personally. S t a t i s t i c s Canada 71-001 " L a b o u r F o r c e S u r v e y " .  Figures represent actual unemployment r a t e from UIC and and M i n i s t r y o f Human R e s o u r c e s d a t a . (Total r e c i p i e n t s as a percent of estimated labour force)  6 There would be some reason to believe that hardship levels would not be as severe  as  they  may  appear  (given the  high unemployment  levels and  the  longer  average duration of unemployment) due to the high percentage of working females in family  groups and youths who can still  households  would  probably still  have  be supported  at  least  one  by working parents.  member  working  That is,  and providing  family income. However, the large increase in welfare recipients (which would exclude household members unemployment  in  with other members at work) does contradict the suggestion that the  modern  context  presents  minimal  hardship  (as  is  implicitly  assumed in the bulk of monetarist economic theory and the concentration on inflation control).  4  At  the  aggregated,  national  level,  the  costs  of  unemployment  have  been  calculated as enormous. For example, in the U.K., Thrift (1979, p.126) describes how unemployment, even in the relatively lower unemployment period of 1974-1976, cost $20,000 million in lost tax revenue, payment of benefits, and losses in national income. Just the difference in output expected if the labour "resource" had been fully utilized has been estimated as amounting to hundreds of billions of dollars in the U.S. (and at least 11 to 12% as much in Canada) (Tarshis, L. (1984) p.115). In Canada, social cost accounting techniques have been used to estimate the total social and economic costs of unemployment (between  1970 and 1982) as approximately $76 billion dollars  (Denton, R. (1983) p.19). This figure includes direct economic costs (from  foregone  production and lost wages), lost government revenue, and U.I. payments and estimated social costs of individual unemployment stress-related indicators.  "The G A I N welfare rates are very low and would not provide a comfortable standard of living. In 1985, single people under 25 years receive $325 monthly, for the first month on welfare increasing to $375 per month after eight months (with many restrictions on possessions and house-sharing arrangements and exhaustion of credit source requirements). Those over 25 years receive $350/month for the first month increasing to $375 per month after eight months (B.C. Ministry of Human Resources (1985)).  7 At  the  individual  level,  costs include  the  more  direct  economic  impacts  on  labour force members such as loss of income and the gradual loss of skills as well as the indirect more intangible detrimental social and psychological effects which are often virtually immeasurable (Tarshis, L. (1984) p.115; Thrift, N . (1979) p.126). The alienation and  pathological  anecdotal  form  unemployment breakdown,  ramifications and  are  incidence  of  prolonged  occasionally and  duration  unemployment  examined  in  is  linked  often  alcoholism, violent crime, juvenile  are  often  discussed  socio-psychological studies. to  mortality,  mental and prison admissions (Deaton, R. (1983) p.18). Sinfield  High  suicide,  delinquency, stress-related  in  family  disease,  and  (1984, p.240) believes  that the full social cost- of unemployment is not- recognized because it falls unequally on the poorer and weaker sections of society. Work can be perceived as the key means by which an individual's life chances are circumscribed (Dicken, P. & Lloyd, P. (1979) p.128). In a market economy, the individual  has  to sell  his or  her  labour power  for sustenance and participation in  consumer society. Work-related income and status are the determinants  of the overall  form of, and one's position in the social structure. Hence, the nature of work (and of course the lack of work) will be a primary influence on the individual's power and control over resources,  perception by other people, and self-esteem.  There would be  many other broad social processes operating to influence one's life chances and access to social resources (such as education) but none would have such a direct effect upon the immediate life situation of an individual. As a result quality  of  life  unemployment),  of this assumed of  members  of  together with the  the  unemployment problem in the  and  significant topic for  research  undertakings.  importance society  of the  (usually  labour force a  recent high and persistent  activity on the  detrimental levels of  Vancouver C M A has been selected  investigation in this thesis -  at least at the  impact  from  unemployment, as a  relevant  time of the  8  The  general  aim of the  thesis  is to  investigate  the  nature  and  unemployment in the Vancouver C M A study area. That is, the research towards  a  determination  of how  the  differentiation  in  unemployment  causes of is oriented  characteristics  (which can be identified at the intra-urban level) can help in the understanding of the underlying processes causing unemployment Although a few studies have emerged recently, the intra-urban focus is not the usual scale for the analysis of unemployment A regional perspective, of considerably less depth, is also provided. Due  to resource constraints and the forbidding complexity of the unemployment  problem  in general, the  specific  nature  of  the  investigation will research  focus  necessarily be limited  adopted  is  reflected  in nature and  in  the  the  methodological  approach utilized. A distinctly geographic perspective for the analysis of unemployment is also a rather  rare  and  recent  approach  to  the  problem.  However,  geography  has  been  considered as an important basis for unemployment research on two broad criteria. Firstly,  space  between the demand labour  supply  and  must  provide the  ultimate  constraint  on  the  matching  process  for, and the supply of, labour. Hence, the relative location of demand  is  important  for  a  true  understanding  and  practical  application of theory and policy on the labour market operation. The abstracted labour market (an aspatial conceptual entity) must be brought  "down to Earth" where space  will play a significant role in the supply-demand adjustment process. Secondly, a geographical study provide  a  useful  analytic framework  basis is appropriate for  unemployment  because spatial units can research.  This  capability is  particularly important when there is a paucity of data of the type required for an evaluation of some specific aspect of the labour market operation (as is the case in this study). In fact, the data base is usually deficient for most types of unemployment research and geostatistical data and statistical inference techniques, (based on these units) can  help give some  idea of the  nature of the  required  missing information. The  9 benefits to be derived from the use of spatial-based labour market data apply to both the demand and supply of labour. For the demand for labour, spatial units can be invaluable for monitoring the dynamic form of the organization and spatial structure of economic activity. In relation to  the  supply  of  labour,  space  can  provide  a  basis  for  analyzing the  changing  distribution and nature of society (as the "labour force") which would be, at least to some extent, reflected in the urban residential spatial strucure. The  geographic  perspective  recognition of the inherent  adopted  for  this  study  necessitates  dangers of geographical determinism (the  an  explicit  overemphasis of  space as a causal agent) in the formulation of the methodology and the subsequent analysis. The specific objective of the thesis research is twofold. The first aspect is the major section of the research comprising an investigation of the changing labour supply characteristics and nature of employment demand in the C M A , from a spatial perspective, primarily to assess to what extent job dislocation (the spatial separation of available appropriate labour supply and demand) may contribute to intra-urban unemployment variation (and, by implication, to unemployment in general). This research hypotheses  consists essentially of a series of tests of relevance of the two major  proposed  by theorists  as the  dominant  explanation of intra-urban  spatial  unemployment variations. The "demand-side" hypothesis emphasizes the negative effect of the frictions of space (usually greater commuting costs and reduced information dissemination) on the probability  of  implicates  the  unemployment  finding,  or  being  decentralization  able  to  accept,  process  as  a  The suburbanization  cause  work. of  This  viewpoint commonly  observed  of industrial activity (and  hence,  high  inner  city  most additional  labour demand of this type) is seen to increase the required journey-to-work trip for at least part of the appropriate labour force "entrapped"  in the inner city core area  10 (often  low-income) housing. The  greater  distance  to potential  work is believed  to  reduce the ability of these inner city residents to find and accept potential jobs and the resultant unevenness  differential unemployment probability is held to underlie the mosaic of  for unemployment levels and to be a significant cause of unemployment in  the urban setting. Hence, increased distance from potential employment demand would be expected to be associated the  relative  locational  with higher unemployment levels.  changes  of  employment  demand  5  are  Access, mobility and perceived  as  major  determinants of the pattern of unemployment The alternative hypothesis (often termed the "supply-side" thesis) perceives the intra-urban  variations  in  unemployment  rates as- predominantly  a  product  of  other  non-spatial factors. The major variables utilized to explain unemployment variations are usually socioeconomic characteristics of the labour force and the differentiated nature of the urban housing market That is, the personal characteristics of the labour force are thought to determine the probability of unemployment of individual members and the observed pattern is conceived to be a result of residential distribution of people (based on their personal  characteristics)  would  housing  reflect  the  to the  heterogeneous housing market  distribution of  those people  with  varying  Hence,  space  unemployment  probabilities but would have little or nothing to do with the actual determination of unemployment probability. Consequently, this analysis is also an investigation of the appropriateness usual conceptualization of the C M A as the  local labour market or the area  which space should have no effect on the labour market adjustment  of the within  for any individual  or group. Evidence to the contrary would suggest that there is actually a series of discontinuous local labour markets within the C M A geostatistical boundaries. The labour "sub-markets" sub-groups  would  be  defined  by  the  location  and  space-time  possibilities of  which would, in turn, probably be a result of the personal characteristics  It will be very difficult to assert causality in this study given the aggregated nature of the data utilized.  5  11 of labour force members. Although  it is realized that this  approach  may  not  necessarily  provide lb_  explanation of urban unemployment, it is hoped that it will provide some insight on the underlying processes at work detailed  investigation of the  particularly as a consequence  changing  nature  of the  of the accompanying  occupational,  skill  and  housing  characteristics of the unemployed in the C M A . The need  for a search  for processes underlying unemployment,  in the C M A ,  operating at levels beyond the urban sphere, has justified the second major section of the  research  changes  which is focused  in the  geographical  on the  manufacturing  scale  to  production  investigate  labour d____i across B.C.  B.C. regional level. Broad  at  least  sector one  have  been  economic structural  examined  dimension of the  at  this  changing  wider  nature of  6  The regional focus on manufacturing production activity and occupations has not been based on an a priori conception of the economically vital nature of this sector but  is  simply  available.  7  provided  It is fully  as  a  case  study  realized that the  of  a  major  manufacturing  sector  for  which  data  is  industries comprise a declining  sector which has probably received too much emphasis in existing theory and research -  the  service  sector  may  well  be  having a  substantial  ameliorative  effect  on  the  reduced demand for labour in the goods-production industries. However, as discussed in subsequent sections of the thesis, the selection of the goods-producing sectors comprises an interesting and relevant study focus for a number  The study of manufacturing production activity is operationally divided into three arbitrary geographic levels within the province - the core urban area of the Vancouver C M A , the suburban area of the Vancouver C M A , and the "nonmetropolitan" area of the province. The "machining", "product fabrication", "processing", "metal fabrication" and "materials handling" occupations in Statistics Canada's labour force and census data have been selected to represent the appropriate sections of the workforce for the comparison and integration with the manufacturing production statistics (also, from Statistics Canada) at the sub-provincial level. Although this assumption is by no means completely accurate, the rationale for this choice is reasonably sound (and is explained in detail in the methodological description in Chapter 7). 6  7  12 of reasons including: 1.  The  manufacturing  low-skilled jobs groups  which  production  and have  manufacturing  is a the  sector  major  a  potential  highest  production labour  has  high  source  probability  force  of  of work for these  of  also has  concentration  unemployment  a  large  The  share of the  pool of unemployed, has had exceptionally high unemployment rates for some time (at least in B.C.) and has experienced one of the  highest  increases in unemployment levels in recent years in the province. 2.  Changes in manufacturing production activity would be closely linked to the  process  of deindustrialization thought  to  be  a contributor' to  the  contemporary economic woes of many "advanced" economies. 3.  Many  theorists  overstated directly  and linked  believe  the  stress to  the  autonomy  of the  importance  secondary  of  service sector  the  role  activity (Noyelle,  T.  of  has  those  (1983)  been  services  p.280).  The  overall decline of economic activity in B.C., during the 1980's, with the downturn in the resources industries, may provide some evidence of this proposition.  However,  the  geographically tied with economy  (from  necessary  the  link  may  expansion and  organizational  changes,  no  longer  be  integration of the  decreased  linkage  as  "world"  costs  and  improved communications technology).  Hence, the first section of the thesis research contribution  that a lack of access  unemployment  levels  and  variations  to in  "potential"  is designed to evaluate  employment  unemployment  rates  opportunity within  the  1) the  makes  to  C M A , or  alternatively, 2) to what extent unemployment variations within the urban area are a housing  effect  reflecting  broad  socioeconomic  factors  and  broad  economic  structural  13 changes. The second goal is to synthesize some of the broader  structural  explanations  of  unemployment  wealth of literature  (many  of  which  on  the  stress production  activity in a key role) and to examine whether there is any evidence of these trends in the B.C. manufacturing production activity context Radical geography (and associated theory on the role of labour in the restructuring of industry (in which unemployment is  usually perceived  processes selected  are as  as  investigated the  primary  a  class weapon)) in the  field  second  for  is the major  major  school whose hypothesized  section. This  investigation in view  published in recent times, based on a "neo-Marxian"  of  perspective the  has  been  mass of literature  approach; on labour's- role in  broad structural changes, and in view of the rather minimal effort to provide empirical instantiation of the existence or outcomes expected from hypothesized processes. The  background literature  for  the  thesis  research  has  been  summarized and  divided into five chapters. Chapter 2 presents a brief review of the major elements of the  neoclassical models of the  labour market to illustrate the  underlying conceptual  framework of most contemporary theory and policy in the "advanced" Western nations. The  limited  demand  and  role  attributed  the  associated  value-orientation  of  Recurrent reference  the  to  space,  labour  neoclassical  the  market  perceived  nature  adjustment  paradigm  are  to neoclassical economic-based  of  process,  major labour  labour and  themes market  supply  the  of  dominant  this  theory  and  and  chapter. policy  shall be made throughout the discussion following Chapter 2. Chapter 3 introduces some of the major constraints on the perfect operation of the  labour market -  structural  and  spatial  market adjustment  many of which are thought to result in unemployment Social constraints  are  briefly  reviewed. Spatial constraints  on  labour  provide the underlying basis for the division of the two alternative  hypotheses on intra-urban. variations, in. unemployment., and. a fairly detailed review of past research and theory on the two major schools of thought is presented in Chapter  14 4. Chapter 5 is partly empirical in content with an examination of suburbanization of industry (in terms of output and employment) trends in the area since the  mid-1950's. The intra-urban  Vancouver C M A study  decentralization of industry is the raison  d'etre of the demand-side hypotheses of intra-urban spatial variations in unemployment The  principal  literature  review  for  the  second  major  research  section  is  completed in Chapter 6 which consists of a syntheses of the major radical views on the role of labour in the restructuring of production systems. Unemployment has a key role in many of the radical geography hypotheses. The balance of the thesis follows the format of most research reports of this type with the exception of a major division of the result findings between Chapters 8 and  9  (summarizing the  urban  and  regional  level  results  respectively). Chapter 7  describes the methodological approach and Chapter 10 is an attempt to integrate research  findings  at  the  two  levels  and  incorporates  discussion  of  some  the  major  implications of the study findings. The conclusion provides a quick review of major findings  and surmises  upon the  nature of predominant  processes  at  work and  the  possible future scenarios faced in the B.C. context Data sources utilized are primarily secondary in nature with a heavy reliance on existing Statistics Canada data. The most detailed data available is for the census years, particularly 1981, which is not an ideal year for the study of unemployment in the C M A due to the  low unemployment levels experienced in this year. Manpower  U.I. data has been used for a supplementary analysis of unemployment in 1980 and 1984 and has enabled the examination and comparison of the 1981 situation with the nature  of  unemployment  in  the  C M A in  manufacturing production statistics at which unfortunately  the  more  recent  itmes.  sub-provincial level  Statistics  Canada's  (in document  31-209),  is only available up until 1981, has been the major information  source for the regional level analysis.  Chapter II T H E NEOCLASSICAL CONCEPTION The  nineteenth  century  historical  OF THE LABOUR MARKET  and  sociological  context  of  the  industrial  revolution heavily influenced the classical economic conception of the market for labour. Under  this  perspective,  the  labour  input  to  the  production  process  was  implicitly  considered in terms of a horizontzal, perfectly-elastic long-run supply curve being  equal  to  the  size  of  the  lower-class  population  (see  FIGURE  supply  2.1)  (Tait  Montague, J. (1970) p. 36).  Figure  The  2.1  Labour  Market  Economic  i n the  Classical  Model  cost of labour  supply (subsistence level)  L(0)  L qty  L(l)  Source: Adapted from T a i t Montague, J.(1970,p.22) Unlike more localized and scarce resources, labour was assumed to be at hand in the quantity and quality (homogeneous equipment  at  whatever  and unskilled) required  location was chosen  for  industrial  to man the capital  development  Consequently,  spatial considerations were completely irrevelevant and demand for labour was perceived as being met  by an automatic  Excess labour  supply above  response from  demand  the  requirements  unlimited population of workers.  would not  occur as the  "natural"  wage rate (subsistence level) ensured on equilibrium matching of supply to demand  15  as  16 mediated by Malthusian limits to the reproductive behaviour of workers. This view of the labour input was consistent with: 1.  The social relations of that European historical period in which the subistence wage was perceived as a logical extension of the traditional feudal relationships from which the capitalist mode of production emerged and,  2.  The  massive  rural-urban  migration  of  labour  to  burgeoning  industrial towns which ensured an unlimited supply of labour at the basic cost required for the physical sustenance of the worker (and family). In early neoclassical economic theory of the late nineteenth century, the concept of the labour "market"  was developed to incorporate the analysis of labour within a  market like that for any other commodity for sale. The introduction of the notion of possible scarcity in labour inputs inspired the curve in subsequent labour  market  theory.  adoption of a positively-sloped supply  The  early neoclassical appproach  (up  to  approximately the mid-twentieth century) was primarily concerned with the nature of the demand curve and the use of marginal analysis to judge the returns made possible by  labour  inputs  (Tait  Montague, J.  (1970)  p.  90). The  market  for  labour  was  subsumed under the neoclassical rubric of marginal utility theory (proposed by Walrus and  others)  showing  how  prices  at  which  commodities  or  factors  of  production  exchanged are determined by the relative marginal utilities of people taking part in the transactions. Such  fundamental  neoclassical  perspectives  sub-discipline of labour economics which has contemporary in  the  field  (capitalist)  provided  the  foundation  for  the  evolved as perhaps the major Western  of study encompassing a systematic, theoretical treatment of labour economic, system.  Although  based  on  the  neoclassical  economic  paradigm, the simple modelling of early proponents has been subsequently modified in  17 an attempt to account  for observed  imperfections  in the  ideal operation  of labour  market  A. T H E D E M A N D A N D SUPPLY F O R L A B O U R IN COMPETITIVE  MARKETS  In its simplest form, the single, spatially-abstract labour market is conceived as a  bourse  Lloyd,  or  mechanism  P. (1981)  for  p.128) or  matching job-seekers  to job-providers  simply as a convenient  abstraction  (Dicken,  for  the  P. and  purpose of  rationally organizing ideas about the job-matching process (Fleisher, B. and Kneisner, T.  (1984) p.172). Labour, as an impersonal factor  discretely  exchanged'  interdependence,  in  a  transaction  market  like  any  of production, is assumed  other  cost or planning. The  commodity  wage  market  is portrayed  to be  with  no  as merely  the  price paid to the seller of labour by the buyer. In common with all neoclassical theory, the operation of the labour market is assumed as being governed by a number of axioms: 1.  A  perfectly  competitive  profit-maximizing  economic  economic  environment  "men"  make  within decisions  which  rational,  with  perfect  knowledge. 2.  Exchange is the central social and economic process.  3.  Price is the key signal and short-run clearing mechanism.  4.  The model is perfectly equilibriating and symmetrical.  5.  Disequilibrium  will  be  met  by  substitution  as  the  main  adjustment  process. 6.  The outcome is optimal and perfectly fair -  the market is perceived as  the meritocratic allocator of rewards to individual persons. 7.  Individuals exercise free choice and outcomes align with preferecnes fulfil  and  utiliy- maximization criteria. (Clark, G . (1983b) p. 166; Storper, M . and  18 Walker, M . (1983) p. 8-9) Under this scenario, labour and its characteristics are listed in a central market place, bidding ensues, and the price is determined by the  interaction of supply and  demand and substitution options. Space, if recognized at all, is simply a passive stage on  which  friction  labour exchange is freely facilitated (Clark, G. (1983) p.2). However, the  of space  on the labour market operation is an essential aspect of the  part of the intended research after  a  brief  overview  of  aim and spatial (and other) the  ideal  operation  of  constraints  labour  are  markets  first  introduced  in neoclassical  economic theory.  1. T H E D E M A N D FOR LABOUR The  marginal  productivity principle is  the  primary  means  of  assessing  the  demand for labour at the level of the firm and provides the essential link, in labour economic theory, between the product and labour markets. Labour is envisaged as a divisible commodity arranged according to the most efficient mode of production. Labour demand is usually referred to as a derived demand stemming from a 1) market  relationship  marginal  returns  (the to  demand  the  enterprise  technological relationship (the that results  from a  for  goods from  and a  services  small  to  be  variation  in  produced sales)  and  and  marginal physical productivity of labour or the  small increase  in labour  services  with  capital  2)  the a  output  fixed) (King, J.  (1972) p.19). The product of the marginal revenue (MR) (derived from the product market) and  the  marginal  productivity  of  employment enterprise  physical product  labour (MPPL)  of  one  from  the  extra  unit  or of  of the  labour addition  labour.  addition of units  (MPPL) to  Having  total  gives  the  revenue  determined  marginal produced  the  of labour,, comparison with  returns the  cost  revenue by  the  to  the  to  the  employer in adding labour services, supposedly reveals the amount of labour required  19 for profit to be maximized of  labour (a  firms will  that is, where the M R P equals the marginal cost (MC)  function of the  going wage  rate).  Under the  hire labour as the only variable factor  equilibrium assumptions  of production, until  the  M C of  labour is equal to the wage that it creates. Therefore, the firm's labour demand curve is defined by: W  = VMPL =  P.MPPL  where W =  wage  P = market price V M P L =• value of the marginal productivity :  of labour (MPPL.P) The key concept of marginal productivity implies a negative relationship between the wage rate and the level of employment offered by the firm increased  wage  rates will  mean  a  decrease  in  the  firm  demand  ceterus paribus, for  labour. The  negative slope of demand curve (see F I G U R E 2.2) reflects" this inverse relationship and the demand schedule itself shows the amount of labour firms would be willing to hire at various wage rates. In this microeconomic view, marginal productivity is used to derive the level  of  employment  and  not  its  wage  (which  is perceived  as  being  firm's  determined  exogeneously at the aggregate or industry labour market level) (Addison, J. and Siebert, W.  (1979) p.35). As such, it does not constitute  posited as the  "rational" process  for  a theory  of wages but is simply  establishing derived demand  for any  factor of  production. The derivation of the demand for labour when the firm adjusts capital inputs requires  a  slightly more  complicated  analysis  by  incorporating  the  concept  of  an  expansion path of points of tangency between isocost and isoquant lines for labour and capital (Fleisher, B. and Kneisner, T. (1984) p. 60). Isocost (or isoexpenditure) lines  20  Figure  2.2  The F i r m and I n d u s t r y L e v e l Labour Demand Curves Under P e r f e c t  Competition  w  UI)  L qty  _L  Source: Adapted from M. Gunderson  L qty  (1980,p.148)  show how the firm can implicitly trade-off labour and capital for a given budgetary constraint and isoquants are the  locus of input combinations capable of producing a  given level of output By allowing, for example, the wage rate (w) to vary, substitution (input  mix) and  scale  (output  quantity)  effects  (operating  on  the  expansion  path  defining the way a firm adjusts its inputs as output grows or contracts) are considered to be the  determinants  of the  quantity of capital demanded  form  from  of the labour demand schedule. The  wage change  absolute  is more unpredictable under  these  conditions and the elasticity of demand for labour is greater than when capital levels are  fixed.  Most  analyses assume  the  technical relationship between production inputs  and  outputs (the production function) as fixed. At industry levels, changes in labour demand are evaluated from changes such  as movements in the price of output Decline in product price is seen to affect firm's demand curve for labour because  the value of the marginal product of labour will  drift downwards making labour demand schedules steeper than for those at the level (see F I G U R E 2.2) (Fleisher, B. and Kneisner, T. (1984) p. 75).  firm  21 In summary, the study of labour demand in labour economics is pivoted around how  changes  in  product  demand  and  labour  and  capital prices  affect  the  firm's  demand for labour (Ehrenberg, R. and Smith, R. (1982) p. 21).  2. T H E SUPPLY O F L A B O U R Since about shift  World War II, there has been a considerable research  from demand  manipulation to the  intrinsic nature of supply in the  emphasis short and  long term (Tait Montague, J. (1970) p. 35). Analysis of individual labour supply in the shortrun is primarily focused on the supply  response  to  changes  in  the  wage  rate  and  in  non-labour  income.  The  neoclassical model of the supply of time (labour hours) to the marketplace is basically a theory of consumer behaviour in which individuals freely choose to sell their labour to acquire income in the  light of their  utility functions  (containing some  between consumption of goods and services and leisure (non-market) are finite  prevented  from consuming unlimited quantities  nature of scheduled  time and  the  assumed  trade-off  time). Individuals  of goods and hours  due  to  the  limited income available to them  (Fleisher, B. and Kneisner, T. (1984) p. 117). These limitations are summarized in the budget constraint line (see the line connecting g(l) and v(l) in F I G U R E 2.3) defining the  individual's consumption opportunities -  consumption measured  along the vertical  axis and hours of (non-market) leisure time along the horizontal axis. When  the  marginal rate  indifference curve between  of  substitution  ((MRS)  the  negative  slope  of  the  "bundles" of goods and leisure at a given utility level) is  less than the market wage, the decisionmaker chooses to sell some labour time to the labour market (see point "a" in F I G U R E the  budget  constraint  at the  2.3). If the indifference curve intersecting  point indicating zero hours of market  work (h(m)) is  steeper than the budget constraint at that point then utility is maximized, (given U(2) is a high level of utility than U(l)) by not participating in market work at all. (see  Figure  2.3  Utility  Goods & s e r v i c e s  g(D  Figure  M a x i m i z a t i o n : Work $ income  2.4  Goods & s e r v i c e s  U t i l i t y Maximization: No Work $ income  U(D U(2) g(D  v(l)  h(m>  0 Source:  After  Hrs  F l e i s h e r , B . and K n e i s n e r , T . (1984,. p. 120)  0 Source:  h(m) After  nrs  F l e i s h e r . , B . and K n e i s n e r , T . (1984, p.119)  $ income U(2) Figure  2.5  g(l)  U t i l i t y maximization and Hours of Work  g(0)  U(l)  Source:  After  total income  y(0)  earnings from market work  $1(0)-. v(l)  0  1(0)  h(0) F l e i s h e r , B . and Krieisner,T.  h(m)  J  Hrs  (1984, p.124)  23 FIGURE  2.4) That is, for an individual not to participate in the  labour force, the  MRS between market goods and time must exceed the market wage rate at the point where no work is performed (h(m)). As the market wage increases (shifting the budget constraint), it will eventually reach a value where non-participants in the labour force become indifferent between working and not working -  a value called the reservation wage rate where the budget  constraint is tangent to the indifference curve at h(m) hours. Further increases in the market wage will lure the individual into labour force participation. The decision-maker would be seen to maximize utility where the slope of the budget constraint (market wage rate) equals the slope" of the* highest indifference' curve for that individual. Utility is therefore  maximized (see F I G U R E 2.5) at point "b" by consuming h(o) hours and  g(0) goods. Clark (1983b, p. 167) has paraphrased  this process description as the offering  of labour for sale by individuals at a minimum bid price (reservation wage) based on the calculus of utility. Individuals are valued in terms of their individual contributing value to production and supply and demand set the market price (wage). If there are no "bids" greater than the reservation wage, labour is withdrawn from the market Invariant participation rates were the prevailing view by economists until into the  twentieth  well  century (Tait Montague, J. (1970) p.43). Previously, labour supply  variations were primarily attributed to demographic changes. In more modern neoclassical treatments of labour supply in the short-run, the focus is upon the  "supply of labour" as the product of the number of workers by  the number of hours offered for sale and the response of this total supply of labour hours to wage rate changes. The supply schedule is ascertained by the "calculation" of utility  maximization points  at  various  wage  rates  thus  revealing how the optimal  number of hours, is affected by changes in the wage rate and nonemployment income.  24  The  slope  of  the  market  supply  schedule  is  generally  perceived  as  being  positive on the assumption that higher market wages raise the price of leisure relative to the price of consumer goods and hence encourage a substitution of work for leisure and increases hours supplied (the substitution effect). At some point, the supply curve is believed to bend backwards (see F I G U R E 2.6) as a result of the With  increasing  wages,  the  individual  becomes  "richer"  and  "income  eventually  effect".  prefers  to  trade-off consumption .for greater leisure time (Addison,! and Siebert, W. (1979) p.73).  Figure  2.6  The Income and S u b s t i t u t i o n Effects on t h e Supply Curve f o r Labour  wage Income e f f e c t _  ( l e s s hours and m a i n t a i n income through h i g h e r wages) Substitution effect (substitution of work f o r leisure with h i g h e r wage rates) Hours o f Work Offered f o r Sale Source: A f t e r T a i t Montague (1970, p . 4 4 ) The cyclical  role  of  cultural  unemployment),  on  the  factors  and  macroeconomic  participation  decision, and  change  (such  as  increased  analytic treatments of  individual's supply decision in the light of their relevant household context are major  aspects  of  the  labour  economic  study  of  labour  supply  in  the  the other  short-run  (Hewings, G . (1977) p.86). Long-run supply changes are examined within labour economics under the guise of  theories  of  the  investment  in  human  capital  by  the  household  Human capital has been broadly defined by Myers (1975) as that:  and. the  firm.  25  ...national stock of wealth inhering in human beings, representing the capitalized value of income streams resulting from expenditures, public and private, or education, health, training, migration' and the like... (1975, p.94) Under reflecting  this theoretical  differences  framework,  individual  in labour quality and hence  wage variations are  perceived  as  the V M P of labour units resulting  from variable embodied human capital investment If the worker wishes to increase his or her wage rate in the long-run, they will choose to add to their skills through the expenditure of time and money on schooling and training. (Storper, M . and Walker, R. (1983) p. 8). However, this decision is also framed within utility maximization criteria, with  the  occupation alternative  chosen  being: that one  yielding  the  greatest present  value and hence maximizing the individual's wealth. Individuals must choose whether or not to incur direct costs such as tuition and  foregone  (lower) earnings in order  to  reap future benefits. The decision to undertake  an increment  to  the  individual's stock  of human  capital is considered optimal whenever the rate of return on that investment is greater than the applicable rate of interest exceed its cost (Fleisher, B. and rationally adjust their  immediate  Hence, the present value of the investment must Kneisner, T. (1984) p.296). Individuals are seen  their levels of education consumption  and  (embodied  future  expected  human earnings,  capital) with thus  fulfilling  maximization imperatives and their respective preferences. Therefore, observed in income among individuals is a result of differences  respect  to to  wealth  differences  in human capital which  are  individually derived (Clark, G . (1977) p.14).  3. T H E INTERACTION O F SUPPLY A N D D E M A N D FOR LABOUR Prevailing  wage  rates  utilized  in  deriving  the  equilibrium level  of  labour  demand at the firm level, are generally seen to be an outcome of the interaction of labour supply and demand schedules at the  aggregate market level (which many be  26 delineated on industry, occupation or geographic criteria). The firm supply of labour is usually assumed as homogeneous  and perfectly elastic (horizontal) at the market wage  rate. Competitive firms are wagetakers,  and are therefore  all  resulting market  of the  labour they  want at  the  held to be able to employ wage  rate (see  FIGURE  2.2)  (Gunderson, M . (1980) p. 147). However the  aggegate supply  curve is, as shown in F I G U R E  2.7, the total  number of hours workers will wish to sell at each wage rate (with the backward bend from greater income levels being accompanied by an increased desire to spend more time in leisure activities). The market labour demand schedule represents the summation of the labour demanded the  real  wage  by all firms in a particular labour market at each level of  (allowing for  feedback  effects  from  the  markets  for  the  market-clearing  final  output)  (Ehrenberg, R. and Smith, R. (1982) p.28) Where  supply  and  demand  intersect,  or  equilibrium  combination of wages and quantity of labour demanded (w(o) and L(o) respectively in FIGURE parties  2.7)  is found  completely  quantity  of labour  and  labour  satisfied. The workers  desire  is assumed  market to  for  sell  to  labour  be  efficiently  is cleared  matches the  at  amount  allocated  and all  w(o) because  employers -desire  the to  purchase. At w(l) there is an excess of labour up for sale and, at w(2), insufficient labour will be attracted to meet demand (1984)  p.173)  The  equilibrium wage  rate,  requirements  (Fleisher, B. and Kneisner, T.  w(o), becomes  the  firmspecific marginal productivity assessment and consequent  going  wage  levels of labour  rate  for  demand  required. As such, marginal productivity theory does not really provide a basic rationale for  wage  determination  p.69). Unlike  the  and has  been  classical economists  criticized on these grounds (Smith, D. (1977) who perceived  production  labour  as  source of value, the neoclassical paradigm uses a relative measure of value scarcity (supply and demand) as measured by market prices -  the  sole  that of  to define the worth of  27 Figure  2.7  Labour Market Equilibrium  $  wages  w(l) w(0)  -A--  w(2)  / 0  t | excess demand 1I—a t w(2) L(0)  Source: -. A f t e r F l e i s h e r , B. and K n e i s n e r , T. (1984, -D.161)  workers  (Clark,  resulting  from  G.L. (1984) the  p.178).  supply-demand  The  market  interaction  market) and marginal productivity, as the  wage  is  (obviously  basically  within  an  a  phenomenon  effective  "value" labour contributes to the  labour  enterprise  sales revenue, is only indirectly responsible for the determination of wage levels. Market labour demand is the summation of all firms' demand for labour hours at  various  wage  labour-demand  /  levels and  is  directly appropriate  in assessing  the  nature  of  the  labour contribution (to output) relationship. However, the wage paid  to labour, even within the neoclassical conception, is still fundamentally a result of the interaction of the market demand curve with the supply curve. As a consequence,  the  marginal  be  productivity  conceived  as  determined setting  of  unidirectional  of  independent  by the  market  labour of  (though  the  supply  wage levels) and,  equilibrium  wage.  causality, characterize  an  influence  situation  demand)  (which  is  if so, is only an  Interdependencies the  on  and  could  supposedly  well  originally  ancillary aspect in the  contingency,  rather  than  neoclassical models. The somewhat tautological  neoclassical explanation of wage determination is discussed further in Chapter 10.  28  Implicitly assuming away the more fundamental aspects of the distribution of value (as natural and fair in market economies), models are primarily used for predicting how supply and productivity changes influence  creation and  supply and demand  "exogeneous events", such as labour  wages and employment  (Fleisher, B. and  Kneisner, T. (1984) p.173).  B. CONSTRAINTS  ON THE PERFECT OPERATION  OF THE LABOUR MARKET  RECOGNIZED BY NEOCLASSICAL THEORISTS A number of real world phenomena are incorporated within neoclassical labour market theory to account for the inevitable' deviations' which impinge"' upon and prevent the-  ideal operation of the  market for labour described in the previous section. These  appended analyses are usually centred upon modifying or relaxing some of the tenets of  the  simple  neoclassical  environment  (for  buyers  homogeneity  of  the  assumptions),  and the  adjustment  process  market conception  and sellers  "commodity"  in  "exogeneous" distortions  of for  -  the  assumed  labour), perfect sale,  perfect  perfectly  knowledge  mobility  competitive  by  (from  all actors, the  lack of institutional constraints on wage movements general. of  When the  markets  are  ideal  entered  conditions into  are  not  aspatial and the  fulfilled,  labour economic  the  analyses as  malfunctions in the natural, equilibrium process.  1. NONCOMPETITIVE BUYERS OF LABOUR Imperfections  in  the  product market can prevent  the  ideal  labour market  outcome from occurring. In the case of the firm being a monopolist in the product market, that firm will also be the  industry (for  the product considered)  and will  influence its price in the determination of output levels. Because the monopoly firm is the industry, its output demand curve is the downward-sloping, market demand, schedule, and as additional units of output are offered for sale, the price the monopolist can  29 charge must decline (Fleisher, B. and Kneisner, T. (1984) p.196). The  basic  disparity  between adjustment  in the  competitive  model,  and the  supply-demand interaction underlying the monopoly product market outcome, stems from the  determination  competitive the  of  a  monopolistic  labour  labour demand schedule (see  different  nature  of  the  demand  FIGURE  profit-maximizing  curve  2.8).  which  lies below  This divergence  output  decision  the  results from  which  has  direct  implications for derived labour demand. Unlike  the  competitive  decision-maker,  monopolist  profit-maximization  decision  than the  schedule (Gunderson, M. (1980) p.152). Marginal  demand  on the  the  product marginal revenue  bases  the  (MR) schedule rather revenue- is the  additional revenue generated by selling an additional unit of output and, because the monopolist has to lower the price on _J units of output (and not just additional units) to sell more output, the MR will fall faster than the price. Hence, the MR schedule will lie below and to the left of the demand schedule (Fleisher, B. (1970) p. 161). Profit is maximized where MC equals MR and the equilibrium outcome will be one of less output and a higher price than if it were a competitive firm on the product market This monopolist  situation  has  The competitive  direct  ramifications  for  the  derived  demand  by  the  labour demand schedule is given by the product of the  MPPL by the market price of output (P) (resulting in the value of the marginal product of labour (VMPL)), that is:  W = VMPL =  However, schedule:  the  monopolist  labour  P.MPPL  demand  curve  is  derived  from  the MR  30  W = MPPL.MR = MRP  where M R P =  Since monopolist's schedule  (see  marginal revenue product  the  monopolist  MR  schedule  labour  demand  schedule  also  FIGURE  lies  below  lies below  2.3). The monopolist's demand  the  the  demand  competitive  schedule,  the  firm's  demand  for labour falls faster  than it  would for a competitive firm because both M P P L and M R fall (because output price must be lowered) when the monopolist hires more labour (thus creating more output). Consequently, if the  firm  has monopoly power, it will use  and pay a lower wage w(m) than  less labour L(m)  if competition prevailed (L(c) and w(C)). In the  competitive situation, labour is hired up to the point where the wage rate equals the value of the between  the  marginal productivity of labour (w(c)). Under monopoly, the wage  (w(m)) paid and  the  V M P under  difference  monopoly (VMP(m)) has  been  termed as a measure of the Pigouvian exploitation of labour (per worker) (Gunderson,  31  M. 1980) p.153).  The second major type of noncompetitive  market imperfection is the case of  the monopsonist where there is only one buyer of labour in the market Oligopsony (with only a few firms buying labour) is usually a more realistic scenario and only requires slight theoretical modification of the monopsony model. Because the monopsonist is the only buyer of labour, its labour supply curve is the labour market supply curve and it is therefore wages  to  get  additional  units  of  labour.  a wagesetter having to increase  Thus,  the  monopsonist  faces  an  upwardly-sloping labour supply curve (at the going wage rate) rather than a perfectly elastic schedule faced by the competitive firm (Gunderson, M. (1980) p.165). As at the competitive  industry level, this labour supply curve shows the average cost of labour  or the wage that must be paid for each different size of the firm's workforce. The major departure from the competitive MC  model lies in the derivation of a  of labour curve, lying above the average cost (AC) or supply curve, as the  relevant decision-making  schedule (see  FIGURE 2.9). This difference  stems from the  assumption that the firm cannot increase units of labour without increasing the wage rate to aJJ employees (existing and intended additions). monopsonist's workforce, the larger the difference  As a result the larger the  between its current wage (AC) and  its cost of adding a worker (MC) (Fleisher, B. and Kneisner, T. (1984) p. 205). The  MC of  adding  another  worker  equals  the  new  wage  to  additional  employees and the addition to wage costs of existing workers (to maintain parity).  32  Therefore,  the  M C of adding an additional worker is greater than the average  and the appropriate This  cost  M C schedule is thought to lie above the supply (AC) schedule.  equilibrium orientation  totally  ignores  the  possible  wage  effect  of a  potential  balance of bargaining power favouring the firm as the only purchaser of labour in a particular labour market Profit maximization is obtained by hiring labour until the M C of labour equals the M R generated by that unit M R is given by the V M P schedule in the competitive product  market  demanded, becomes  in  situation. relation  relatively more  to  The the  monopsonist competitive  expensive  (required  restricts  scenario, demand  the  quantity  because  hiring  shifts  from  of  employment  additional L(c) to  labour  L(m) in  F I G U R E 2.9). The actual wage paid in the monopsonist firm is read off the supply curve at that level of employment demand resulting from the interaction of the M C  33  and  VMPL  (demand) curves. The supply curve is the indicator of the  amount of  labour which will be forthcoming at each wage (that is Urn) units at w(m)). The wage paid (w(m)) is less than the wage that would need to be paid to employ the competitive labour demand outcome (L(c)) and is also less than the VMP of L(m) units of labour used in the monopsonist outcome. That is, the monopsonist marginal value to the  firm  producing it). This difference equal to VMP(m) -  pays a wage rate to the  (though  the value  is termed the  worker less than their  of output does equal the MC of  monopsonistic  exploitation  of labour -  w(m) per worker. A further outcome of the inequality between  the VMPL and wage rate paid is that an increase in? wages may not necessarily lead to a decrease in the employment level in the presence of exploitation (Addison, J. and Siebert, W. (1978) p.52).  2.  NONCOMPETITIVE  SELLERS  OF  LABOUR  Another distortion on the perfect operation of the labour market, considered in the labour economics discipline, is the effect of unionization as a situation where the sellers of labour are noncompetitive.  The impact of unions, through contracts and  collective bargaining agreements (often at an industry-wide level), are primarily focused on the nature of the supply curve. Wage setting  in contracts is perceived as making the industry supply curve  horizontal so that no employee  can get paid more or less than the contract wage  (Ehrenberg, R. and Smith, R. (1972) p.38). The modified supply-demand interaction outcome results in a wage above the competitive equilibrium with employment levels below those resulting from the lower competitive wage result (see FIGURE 2.10) A "surplus" of labour remains (L(s)-L(u)) as, at wage W(u), L(s) workers want jobs but only L(u) can find work.  34  Figure ^  2.10  The  Effect  of by  Wage-Setting Unions  Contracts  w(u) w(e)  L(u)  L(e) L(s)  labour  Source: A f t e r Ehrenberg, R. and Smith, R.  Figure  2.11  Effect  of  Supply  Limitations  quantity  (1982,p.38)  by  Unions  (u)  ^S(c)  w(e) '  •  L(u)  L(e)  labour qty  Source: A f t e r Ehrenberg, R. and Smith,R. p. 4 0)  (1982,  35 Another important aspect of unionization considered is restrictive entry policies which can also hamper the idealized response of labour supply to labour demand by directly limiting supply (effectively making the supply curve vertical). Employers hire all labour from the union and the union controls who, and how many members, it lets in. The noncompetitive outcome of restricted supply is also an artificially inflated wage (w(u)) and a reduction in labour demanded (see FIGURE 2.11) (Gunderson, M. (1980) p.308). Reductions in the total labour demand from higher wage levels (and restricted supply to some extent) is often attributed as a major cause of unemployment via " the determination of monopolistic trade unions to insist on* levels of pay that price men out of work altogether " (The Economist 1984 ). The impact of unions on non-union wages and demands and indirect effects on protective  trade, automation,  and work-related  legislation  constitute other  aspects of  labour economic theory and research (which unfortunately cannot be discussed due to the limited nature of this analysis). Minimum wage legislation, often at least partly instigated from collective labour groups, can have a similar effect to the wage contracts of unions but are generally more broad in their occupational and geographic spheres of relevance. This institutional barrier would flatten out the supply curve at the set minimum wage level ($3.50 per hour in Canada and $3.65 in British Columbia in 1984 (Statistics Canada 1984)). In FIGURE 2.12, a reduction in demand from D to D(l) would not result, in a decrease in  wage below w(min) -  thus decreasing labour demand even further (to L(min)).  Wages under competitive conditions should drop to w(c). The negative ramifications of minimum wage legislation on efficiency opportunities  of  those low-skilled  aspirations and particularly on the employment  whose VMPL is  considered  below the minimum  wage, is commonly emphasized within the labour economic literature (Fleisher,, B. and Kneisner, T. (1984) p. 185, P.469).  36 Figure  2.12  Minimum Wage L e g i s l a t i o n Effect on t h e Labour Market  $  w D  •S  competitive supply curve  w(min) w(c)  L qty  L(min) L ( c )  3. OCCUPATIONAL Although homogeneous workforce,  CONSTRAINTS  some  labour  there  is  market adjustment.  labour and  economic  admits  minimal  the  explicit  theory existence  analysis  of  relaxes  the  of  occupationally  an  usual  occupational  assumptions  of  differentiated  bottlenecks  to  labour  Beyond aggregate conceptions of the working-age population as the  potential appropriate  labour supply, the ability of a worker to fill vacant employment  demand is perceived to be severely reduced by the skill and qualification levels which act as entry prerequisites for the heterogeneous demand for labour. In labour economic theory, occupational mobility is usually considered as being relatively  unconstrained  constraints  beyond  the  except scope  for  the  of the  possible  effect  of a  discipline (Addison,  number  J. and  of institutional  Siebert,  W. (1979)  p.184). Where there has been some recognition of people as occupationally immobile, at least in the short-run, the result is seen as a series of "non-competing" groups in the  labour  Samuelson  market contends)  (Samuelson, derived  P. (1967) p.552). This socially  restraint  on  the  individual's choice  (or  "biologically"  of labour  as  demand  37  opportunities, delimits a set of sub-markets with corresponding unique supply, demand and  wage conditions. In some more enlightened  labour economic theoretical treatises,  the conception of the aggregate labour market is acknowledged as being confined to certain occupational or industry (and geographic) contexts (Gunderson, M. (1980) p.148). The existence of occupational heterogeneity in the labour supply is also used to explain  the  nature  of  individual-based  wage  differentials,  and imbalances  in  the  supply-demand sub-markets are assumed as being temporary in view of the longterm equilibriating adjustments by individuals choosing to upgrade their skills as prescribed by  human capital  theory.  The possibility  of  labour market segmentation  is  often  discussed but generally given little theoretical treatment (see Chapter 3).  4. INFORMATIONAL BARRIERS Perfect information is assumed in the conception of the ideal labour adjustment model in all of the aspects relating to workers' and employers' utility -• maximizing decisions. From the marginal productivity evaluation of labour inputs, to the optimal choices made in human capital investment theory, to the awareness of any regional wage differentials, complete knowledge is an important condition for the achievement of the efficient, equilibrium outcome. However, labour economic theory does explicitly recognize the fallibility of this assumption and imperfect information is posited as a central factor underlying observed wage differentials (within given occupations) and the seemingly paradoxical coexistence of excess supply and excess demand in the labour market The job search process is inevitably  restricted  "inferior"  to  the  by  incomplete  competitive  information  model  and  predictions  in  the  resultant  which  outcome  workers  will  is  far  allocate  themselves to create an equilibrium situation throughout the geography of the economic system (Addison, J. and Siebert W. (1974) p.171). The potential employee, rather than the employer, is the focus of labour market theory on the job search process.  38 Facilitating the adjustment of the labour market perceived to be substantially constrained by the less than perfect awareness of the relevant actors, is a principal rationale  for  the  establishment  of  Canada  Manpower  Centres  (Employment and  Immigration Canada (1981)).  5. GEOGRAPHIC SEPARATION OF SUPPLY AND DEMAND OPPORTUNITIES In the aspatial setting of the ideal, single labour market, imperfect geographic mobility, in the matching of supply and demand, is obviously assumed away. However, the physical separation of labour supply and demand locations is one of the most apparent constraints in the provision of the quantity of labour required at a potential • or actual work site. More elaborate labour economic approaches continue to adopt the stance that labour is  mobile  in the  longer  term and  evidence  of  regional  and international  migration is presented in support of this doctrine (Rees, A. and Schultz, G. (1970) p.2). Whether the locational adjustment of supply to demand (for the most  efficient  allocation of labour) can or should be made in the long-term is a highly contentious issue in current times. In the historical period appropriate to classical economic theory, it was assumed labour would naturally migrate in response to wage and employment opportunity and this perspective has been perpetuated in the neoclassical paradigm. However, like all factors of production in neoclassical theory, the response of labour is not instantaneous and it is recognized as being relatively immobile in the short-run. There are also limits on the spatial range of potential employment from the given residence of a worker which is defined by the daily commuting trip and the means available for this journey-to-work (more on this in Chapter 3). To the extent that distance can be perceived in a positive relationship with costs which discourage interaction, spatial separation can be. considered as having a frictional effect on labour market adjustment (Dicken, P. and Lloyd, P. (1981) p. 131).  39 Consequently, longer-term  short-run residential  adjustments relocation  are  would  community and familiarity ties, invested uncertain  environments,  welfare  policies  constrained  by  the  be  to  a  subject  distance  variable and  degree of  inertia from  capital in the original location, aversion to which  reduce  monetary costs of relocation to accessible employment  costs (de  of  not  moving, and  Souza, A. and Foust, J.  (1979) p.324). Despite  the  recognition  of  short-run  constraints  and  possible  barriers  to  residential relocation impeding optimal labour market adjustment, labour economics has minimal  analytic  jobmatching  incorporation  process."  Space  of  is  geographic  briefly  factors  and  acknowledged  as  their a  influence  variable  on  showing  the the*  instantaneous and perfect matching of supply and demand but there is certainly no coherent treatment of geographic labour makets many  ways,  this  abstract  theoretical  inclination  particularly at the local level. In is  a reflection  of  the  discipline's  assumptions rooted in an underlying classical economic philosophy labelling labour as a commodity -  and a willing, mobile and readily available one.  C. UNEMPLOYMENT According to the classical analysis and the unconstrained labour market operation conceived  in  neoclassical  theory,  there  should  be  no  such  thing  as involuntary  unemployment (Addison, J. and Siebert, W. (1979) p.384). "Involuntary unemployment" is roughly equivalent to the most widely accepted definitions of unemployment (as an economic indicator) which require that a person be available for work, actively seeking work, and unavailable to find work even for a real wage rate below the previously attained level (Fleisher, B. and Kneisner, T. (1984) p.24). The  underutilization  of  any  resource  (including  labour)  will  not  occur, in  neoclassical models, according, to Say's law of markets in which "supply creates its own demand". If a worker is made redundant, he or she will be reabsorbed by bidding  40 down wages so that a greater quantity of labour can be utilized by the firm. However, this naive conception of unemployment is criticized in labour economic theory which recognizes the constraints on the perfect labour market adjustment process (as outlined in Sections 2.A and 2.B) which will result in at least some level of unemployment at any given point in time. Nevertheless, unemployment is still perceived as a consequence  of the  dysfunctioning  of natural equilibriating tendencies in the  interaction of supply and demand. A  succinct  statement  of  the  major  labour  economic  explanations  of  unemployment is difficult to produce but there does appear to be a research and theoretical  emphasis- within the discipline on those aspects of classical theory which  explain away all unemployment as either "frictional" (short-term changes in the type of demand for labour), "voluntary" (in the sense of an unwillingness of workers to accept jobs at the wage level offered), or from institutional wage rigidities. Fleisher, B. and Kneisner, T. (1984, p.464-5) believe that unemployment has been overstressed in its interpretation as a simple  form of excess supply and that, in fact, the major  consideration is the role played by the individual in determining job opportunities. Few  labour  economic  treatments  of  unemployment  progress  beyond  the  microeconomic examination of the labour supply curve and the effect of "exogeneous variables" (particularly minimum wage legislation, union, and unemployment insurance (U.I.) impacts) on the job search process and tend to focus heavily on how individuals determine their optimal job search strategies. The lack of information about a) job opportunities, b) appropriate human capital investment  adjustments,  and c) about the  future in cyclically-sensitive industries, is posited as the major source of unemployment (Fleisher, B. and Kneisner, T. (1984) p:521). The other major attributed cause of unemployment relates to wage rigidities and increased  reservation wages, from artificially high, minimum or contract wage levels  (which require wages above the VMPL of, in particular, low-skilled workers - hence  41 making them  "unemployable"). Ul effects are thought to raise the reservation wage  leading to longer durations of search, higher wage expectations and decreased incentive for firms to smooth out employment demand fluctuations as an alternative to layoffs. Labour economic literature also covers (albeit in brief) the macroeconomic policy impacts on overall employment levels and texts usually provide outlines of the various categories of unemployment based on the original Keynesian (1942) schema dividing unemployment types into those due to: 1.  Unemployability  2.  Seasonal factors  3.  Men moving between- jobs  4.  Misfits of trade or locality due to lack of mobility  5.  A deficiency in aggregate effective demand for labour (Kahn, R. (1976) p. 29)  It is beneficial at this point of the paper to briefly describe the breakdown of unemployment used in most salient analyses. Although there is little general consensus on the definition and utility of the scheme, the disaggregation the  only  following  broadly  acknowledged classification  analysis and discussion. The  and will  (by cause) is probaly  be used  repeatedly  in the  classes are by no means perfectly mutually  exclusive.  1. THE UNEMPLOYABLRS This type of unemployment is seen to be the result of an extreme form of skill mismatch whereby some people of working age have no attributes making them suitable for employment The low-skilled, whose VMPL for firms' activities is below minimum wage rates, could be grouped into this class of unemployment Part of this class would still be included in the unemployed labour force.  42 Reasons for unemployability can include a) age, b) lack of skill, c) ill health, d) physical disability, and e)  simply  "unwillingness  p.148). The long-term unemployed may well  to work" (Standing, G. (1983)  develop  traits inimical  to productive  employment (such as loss of skills and dexterity, alcohol and drug use, and other forms of anomie) and end up under this categorization. The  concept  is  debatable  on  the  basis  of  its  subjective  nature  and  "unemployables" are often classified as part of structural unemployment (see 2.C.4).  2. SEASONAL UNEMPLOYMENT Seasonal unemployment is simply unemployment' attributed- to* the seasonal- labour demand requirements of some forms of economic acitivity on which portions of the labour force depend.  3. FRTCTTONAL IJNEMPT DYMENT Frictional unemployment is thought to occur when unemployment and vacancies (in  the same occupation) occur simultaneously in a given location (Chiplin, B. (1982)  p.289). It consists of all those unemployed persons for whom there appears to be vacancies  in the  categories  for which they  are registered but have not yet been  brought together by job search activity (Gunderson, M. (1982) p.288). Even when supply equals demand for a given job type, there are perceived to be inevitable lags or delays in workers finding jobs which stem, at least in part from inadequate information flows within the labour market Thus, informational barriers on the labour market operation are an important aspect of frictional unemployment  4. STRUCTURAL UNEMPLOYMENT Although, the idea of "mismatch" is probably the key concept of structural unemployment its definition is subject to a great degree of variation and contention  43 within and between respective labour-related disciplines. Paul Cheshire (1981, p. 228) describes structural unemployment as that resulting from the coexistence of vacant jobs and unemployed persons within the same labour market where the unemployed are, in some way, unqualified for the vacancies. The  underlying causes of  structural unemployment  long-run changes in the economic  are  usually  base of a region or economy  attributed to  and changes in  demand for labour in particular occupations, industries and regions (Chiplin, B. (1982) p.287). However, the labour supply side has also been emphasized. This aspect relates to the inability or failure of labour to adopt to changes in technology  or changing  demand so that unemployment- becomes concentrated, for long periods of time, among specific  occupational  groups  in  particular  areas  (Thirl wall,  A.  (1969)  p.23).  This  perspective lays the blame on the unemployed. Standing  (1983)  describes  seven  major  contributing  causes  of  structural  unemployment: 1.  Changes in industrial structure  2.  Mismatch of skills  3.  Geographical mismatch  4.  Demographic shifts  5.  Institutional rigidities (including growth of non-wage U.I.  effects,  unionization,  minimum wage legislation,  the  "poverty  income  trap",  policies  labour costs,  wage  and  rigidities,  labour market  segmentation)  He  also  6.  Unemployability  7.  Capital-restructuring unemployment  attempts  (rather  unconvincingly)  to  conceptually  separate  technological  unemployment, as the labour displacement associated, with mechanization and automation linked to cyclical factors, from structural unemployment as the qualitative mismatch of  44  the demand for labour and the supply of workers (which could exist at any level of aggregate demand) (1983, p. 138). Barriers in hiring practices and procedures (including discrimination) have also been included in this category. A  selective comparison and amalgamation of alternative  definitions  has been  undertaken for the purposes of this research. Structural unemployment will primarily refer to the situation where workers and vacancies are considered to be in different labour markets, either by virtue of geography or because of a mismatch in regard to qualifications and characteristics (Gunderson, M. (1980) p.289). Thus, the two major synthesized  dimensions  occupation-structural'  of  structural unemployment  unemployment,  and  b)  relevant  for  this  geographic-structural  study  are a)  unemployment  -  though institutional and discriminatory aspects must be regarded as important As a consequence, labour  the spatial and occupational (and institutional) constraints on the ideal  market  are  perceived  to  fall  primarily  under  the  aegis  of  structural  unemployment  5. DEMAND-DEFICIENT Whereas  structural  fCYCIJCAU UNFMPLOYMENT and  frictional  unemployment  are  generally  conceived  as  components of non-cyclical unemployment demand-deficient (or cyclical) unemployment is defined as that caused by fluctuations in the national level of economic activity (usually equated to the "business cycle") (Taylor, J. and Bradley, S. (1983) p.114). It  is  that  component  of  unemployment  which  is  the  excess  of  total  unemployment over total vacancies once frictional, structural and seasonal elements have been accounted for. Demand-deficient unemployment has little to do with direct spatial or  skill  mismatches  and  is  employment policy approaches.  the  prime  target  of  Keynesian  macroeconomic  full  45 D. MACROECONOMICS. LABOUR ECONOMICS AND UNEMPLOYMENT There is a mass of literature on the appropriate macroeconomic responses for dealing with unemployment and it is impossible to cover the substantive theory, at any level of detail, in this review. Macroeconomic  policy  oriented  towards  the  amelioration  of  cyclical  (demand-deficient) unemployment has its roots in Keynes' (1936) "General Theory" and its explanation of mass unemployment in the industrialized world (in the 1930's) which was largely a rebuttal of some of the tenets of classical theory (Jordan, B. (1982) p.14). The Keynesian approach contended that the national economy might reach an equilibrium below- the level of full- employment because of an insufficiency of aggregate demand. This possibility was conceived as a result of the constant danger that the total sum of consumption and investment would fall short of the levels required to provide jobs for all. His economic theory, insisting that the state accept responsibility for  ensuring  acceptance  sufficient  aggregate  demand, achieved  rapid  and  widespread political  in the post-1945 period. Government spending (via deficit-spending and  money supply expansion), tax reductions and low interest rates would act to remove involuntary unemployment by stimulating growth in aggregate demand (and hence labour demand) (Addison, J. and Siebert, W. (1979) p.389). The relationship between wage inflation and unemployment is a popular area of theory  and  research  in  labour  economic  study  particularly  in  regard  to  the  microeconomic foundations. The so-called "Phillip's curve" (after Phillips (1958)), based on United Kingdom data for the. period 1861 -  1957, estimated a negative relationship  between money wage changes and unemployment levels in the economy as a whole. The simple Phillip's curve wage-employment trade-off suggests that one determinant of change in the level of aggregate money wages is the "tightness" of the labour market (Gunderson,  M. (1980) p.261).  Conversely, controls  on wage increments  and price  controls could be seen to help keep unemployment at "acceptable" levels. However, the  46 negative relationship between wages and unemployment, as embodied in the Phillip's curve,  was  not  upheld  in  the  1970's when  stagflation  challenged  the  postulated  trade-off relationship. Friedman (1968) and Phelps (1968), as spokespersons of the monetarist approach (emerging out of the late 1960's) have questioned both the nature of the Phillip's curve and the efficacy of Keynesian demand manipulation to reduce unemployment in the long-term. By introducing a central role for expectations in regard to inflation and money wages, the monetarists proposed that any trade-off in the Phillip's curve must only be short-term. The central issue revolves- around the "natural rate of unemployment", that is, the  level  of unemployment at which there  is no tendency  for inflation to either  accelerate or decelerate (requiring the expected inflation rate to equal zero) (Chiplin, B. (1982) p.297). Unemployment is perceived to be held below product of structural and frictional forces) increase.  Therefore, any  macroeconomic  policy,  only  by allowing the  decrease in unemployment which  forced  the  unemployment  "natural rate" (a inflation  rate to  by Keynesian aggregate demand below  the  natural  rate,  was  necessarily temporary and would be based on faulty expectations. The end result would be that real wage and unemployment levels would remain unchanged. According  to  the  monetarists,  their  modified, expectations-augmented  Phillip's  curve would have to be based on the natural unemployment rate which has increased over time and is used to explain the stagflation phenomenon of the 1970's. Monetary expansion  by the  government,  and subsequent  inflation, is perceived  as the major  culprit and both inflation and unemployment are seen as consequences of monetary policy rather than as causes (Jordan, B. (1982) p.40). Deflationary policies are pursued directly on the assumption that inflation and expectations are responsible unemployment levels.  for high  47 However,  there  is  also  an  emphasis,  in  monetarist  economic  theory,  that  increased unemployment is largely a product of the growth of the natural rate of unemployment (the policies  that  mobility  frictional and structural components)  directly affected  levels).  This  conditions  emphasis  is  in the  contraposed  which could be changed by  labour market (such to  the  Keynesian  as skills and approaches  of  manipulation of aggregate demand to decrease unemployment The microeconomic persuasion of the labour economic discipline appears to align well  with  the  monetarist  philosophy  (which  currently  has  a strong  influence  in  Canadian, United States and British politico-economic contexts). The overall operation of the economy (the- aggregate labour market) is seen as best left to the- benevolence of the  "invisible hand" of market forces,  free  from fumbling government demand  manipulation, while the frictional and structural problems of the natural unemployment rate are attacked by facilitating the micro-level operation of the labour market informational  improvements and the easing  via  up of supply-side impediments (such as  geographic immobility, redundancy in skill levels, and institutional rigidities on wages).  Chapter III THE SOCIAL AND SPATIAL STRUCTURES AS BARRIERS TO THE PERFECT OPERATION OF THE LABOUR MARKET Those neoclassical  constraints  economic  on  theory  labour have  market  been  adjustment  broadly  which  outlined  in  are the  recognized previous  However, this chapter will extend  upon the discussion  labour market by introducing the  institutional, segmented labour market  focused  on  socio-structural  neoclassical  constraints  which  are  by  section.  of barriers to the idealized  largely  outside  perspectives,  the  realm  of  models, and by elaborating upon the role of space in demarcating the  matching process between labour supply and demand.  A. HETEROGENEITY IN THE SUPPLY OF. AND DEMAND FOR. LABOUR Although  neoclassical-based  differentiated  labour  economic  theory  admits  the  existence  of  occupational supply and demand which defines distinct sub-markets for  labour in the short-term, occupational mobility is assumed as being no impediment to equilibrium conditions in the long-run as individuals sapiently and autonomously choose to invest in human capital. Structural unemployment  from lags in the occupational  adjustment process would only be temporary. Rigidities in the social structure would not exist and all people would be treated equally by society's institutions. Neoclassical perspective  theory  essentially  embraces  a  labour  "queue  theory"  in which employees are ranked along a single ordinal scale according to  their respective wage  economic  marginal productivities (Montagna, P. (1977) p.66). Occupational and  differentials  are  therefore  just  marginal  productivity  differences  which  are  amenable to changes in human capital (though admittedly limited by inherent ability). The  labour market is  discrimination  should  perceived  to be  shaped  not occur under competition  labour on purely economic criteria, will not survive.  48  by economic  motivation  as firms, which  only and  do. no  allocate  49 There is a brief mention of the institutional and dual labour market structures in  neoclassical  economic  theory,  but  the  notion  of  an  institutionally  determined  heterogeneous labour force is by no means fully accepted (Clark, G.L. (1984) p.179).  1. INTERNAL AND EXTERNAL LABOUR  MARKETS  The possibility of unemployment resulting from social institutions and patterns was originally outlined by C. Kerr (1954) in his treatise on the "balkanisation" of the workforce. Institutions  were proposed as the main determinant of the framework of  labour market operation and were seen to present formal barriers which workers would face in a highly structured'labour market (Montagna, P. (1977) p.67). The original work of Kerr (1954) was expanded upon by Doeringer and Piore (1971) in their attack on the neoclassical theorists' conception of the labour market The  "institutionalists" argue that the labour market could actually be separated into  internal and external segments. Structured, "internal" labour markets would be characterized by the preferential treatment of workers inside the firm for jobs at higher skill levels or supervisory positions (over competing applicants from the open market) (Cooke, P. (1980) p.545). Demand for vacant employment positions would be met largely within the context of a single organization (Addison, J. and Siebert W. (1979) p.186). In labour economics, this internal bias in promotion from within the firm is explained in terms of the worker reaping  the  returns  from their  on-the-job  training investments (Fleisher,  B. and  Kneisner, T. (1984) p.360). "External" labour markets are conceived as structureless, open labour markets comprising of everyone else outside the firm and are seen as the relevant field of choice for filling entry-level jobs. Whereas external labour markets would be more compatible with the neoclassical conception of the labour, market (where pricing and allocation  decisions  are  controlled  directly  by  economic  variables),  the  widespread  50 existence of large internal labour markets within the modern form of (predominantly corporate) economic organization would be considered to place further restraints on the supply-demand matching process even within given occupations. Workers would compete in the open market only for initial entry at certain job classifications (usually at the bottom rungs of the employment ladder) and other jobs would be filled by promotion of those workers who had already gained access to the organization. Selection in the internal labour market would be related to the conduct and performance of the individual in terms of the administrative institutional rules of the firm (derived from joint negotiation, unilateral imposition, custom and tradition) which define the pricing and allocation of labour (Dicken, P. and Lloyd. P. (1981) p.200). The  tendency toward internal promotion and job availability would restrict the overall  inter-firm mobility assumed by aggregate, competitive models. D  2. THE DUAL LABOUR  MARKET  Piore (1975) and his associates have elaborated upon the internal-external labour market dichotomy by tying them together dualistically as "primary" and "secondary" in nature (Cooke, P. (1980) p.545). This perspective emerged in the late 1960's to explain the phenomena of urban poverty and unemployment The basic premise of dual labour market theory is the existence of a bipartite (or tripartite) labour market fragmented  on the basis of the different  nature of  behavioural rules between workers and employers. Within the labour market, two broad sectors could be identified: 1.  A "primary" labour market composed of "good" jobs (usually in large firms) with higher relative wages, good working conditions, employment stability and security, higher levels of unionization, and prospects of upward mobility and,  2.  A  "secondary"  labour market consisting of the "bad" jobs with lower  51 wages,  poor  working  conditions,  little  upward mobility,  high labour  turnover and minimal on-the-job skill acquisition. (Clark, G. and Gertler, M. (1983b) p.277 ; Danson, M. (1982) p.258)) Doeringe and Piore (1971) suggest that entry and promotion in the primary labour market is assessed on the basis of the ranking of workers (on their potential productivity) who are advanced by a queuing process (Addison, J. and Siebert, W. (1979) p.189). The primary labour market has been subdivided into 1) an upper tier characterized by white collar, professional occupations with power, wealth and prestige, considerable  autonomy,  good working conditions  and prospects  and a command of  theoretical knowledge, protected by an internal labour market setting, and, 2) a lower stratum containing salespersons, clerical, and skilled manual labour whose work is highly supervised (they  "respond the  demands of capital") and involves training which is  primarily on-the-job (Danson, M. (1982) p.259). In the primary sector, wages are not determined by individual productivity (as with promotion) but are thought to be related to long-term contracts and union power. Employment is drawn from the secondary  labour market as if it were an  undifferentiated labour pool (with homogeneous skills, education and motivations) with wages determined simply according to the quantity requirements of employers (Clark, G. and Gertler, M. (1983b) p.277). There is some disagreement over the nature of the relationship  between  employer  and employee  in the  secondary  labour market (for  example, see P. Montagna (1977, p.68) and M. Danson (1982, p.258). The employment relation between labour and management has been seen as highly personalized -  thus  encouraging favouritism and discrimination. However, other perspectives (such as those of A. Alexander (1974)) argue that "the only nexus is cash". Overall, the views are probably  compatible  in  regard  to  job  security  aspects  and  the  nature  of  the  relationship would depend on the level of management considered. The disorganized,  52 semi-skilled  and  unskilled  production  and  service  occupations  of  the  hypothetical  secondary labour market are not included in the firm's internal labour market A central argument in dualist theory is that entry into and confinement of disadvantaged workers in the secondary sector is not attributed to differences in skill, motivations,  or demands  discrimination  for labour but to  from employers  and unions.  the  power of  Hence, there  institutional  forces like  would be severely  limited  mobility from the primary sector into the secondary sector even in the situation of increased aggregate demand for labour. The  existence of  the  dual labour market (which  is  yet  to be universally  accepted on the basis of sketchy empirical evidence) would split the labour market into at  least two  depicted  discontinuous,  nature  of  the  if  supply  not  entirely  curve  separate,  and  the  systems and would alter the  adjustment  process  initiated  from  movements in demand and wage levels.  Thus,  the  segmented labour market theorists,  with  their  emphasis  on real,  formidable barriers in the institutional framework of the labour market and from the existing social structure, suggest that there are, in fact a set or series of discontinuous labour markets (which have approximate parallels in "occupational" strata). The intellectual  dual labour market perspective, tradition  as  current  radical  in particular, was  theory  -  Marxism.  born of However,  the same the  more  conservative Marxist conceptions of the labour market incorporate poverty and inequality in  the  social  system  as  necessary  functional  aspects of  capitalism and a central  emphasis is placed on the role of a reserve army of unemployed in a purposeful organized stratification of the labour market by the capitalist class (Montagna, P. (1973) p.72). Although  some parallels  could  be  drawn between a reserve  army of. the.  unemployed and the secondary labour market, dual labour market theory does not  53 attribute  the  same  teleological  status  to  capital  but  identifies  the  causes  of  unemployment in 1) the social institutions which realize the theoretical operations of the  labour market,  stratification of  capital  2) from active discrimination, and  3) from rigid  labour  market  which can only be interpreted as the outcome of the dynamic nature  rather  than  as  a  functional  requirement  of  the  process  of  capital  accumulation. If labour market segmentation other group attribute) suggested space  can be structured  along class, racial, ethnic (or  lines, the mapping of residential social area patterns has been  as enabling an identification of the  (Scott,- A. (1981);  Clark,  G.L. (1983)  "building"  of dual labour markets in  p.277). This possibility is seen  to  be  enhanced given that labour market segmentation  creates distinctive income distributions  which  differentiated  could  However,  be  the  employment  located  contentious demand,  and  in space  (within the  existence the  of duality and  problems  of  urban  fragmentation  internal  housing in  heterogeneity  the  in  spatial units, remain as impediments to further development in geographic of labour market segmentation theory.  B.  SPACE  market).  nature of  neighbourhood interpretations  1  AS A N I N T E R V E N I N G  VARIABLE  BETWEEN  T H E EOIJIIJBRTIJM  M A T C H I N G O F LABOUR SUPPLY A N D D E M A N D Probably the first major consideration of the relationship between the spatial structure of economic activity and its required labour supply (hence implicitly involving the role of  space in the labour market operation), emerged  with Weberian industrial location  theory. In earlier neoclassical economic theory, locational aspects of labour supply were disregarded.  This neglect  is easily understood  in  the  relevant  historical context  of  undifferentiated, low-skill labour demand requirement, the relative abundance of labour in the new industrial towns, and the overall aspatial orientation of economic theory, 'For an attempt at linking dual labour market theory and geographical consideration, see M . Danson (1982)  54 The  agglomeration economies of the rapidly growing industrial areas included a large  urban labour pool able to more than satisfy the production activities of firms. Primarily as an adjunct to theory on transport cost derived optimal locations for industry, the bulk of traditional, labour-related location  theory market has revolved  around how industry takes into account given, fixed wage differentials (or other supply characteristics likely to affect labour productivity) (Addison, J. and Siebert, W. (1979) p.170-190 ; Dicken, P. and Lloyd, P. (1981) p.212 ; Lloyd, P. and Dicken, P. (1977) p.214)  1. WEBERIAN INDUSTRIAL LOCATION THEORY Weber's theory of industrial location is essentially  rooted in the  neoclassical  economic paradigm where partial equilibrium and cost-minimization set the framework for  "economic  man" capitalists  deciding where  to  optimally  locate  However, in Weberian models there is a marked divergence theory.  Labour  becomes an  instead  of the  perfectly  immobile,  mobile,  spatially  equally  supply  aspatial labour market model. The firm is seen to consider  its  spatially-fixed  properties  in  its  from early neoclassical  heterogeneous  productive  their industries.  factor  of production  factor of the idealized,  "move to labour" (or at least  optimal  location  decision)  rather than  perceiving labour as moving to the firm. A daily commuting field is implicitly assumed as the uniform accessibility area for capturing a local labour supply. In the simplest, "pure", Weberian industrial location model (1909), which adopts a partial equilibrium approach, the labour input was assumed to have a negligible impact on locational choice consistent with the primacy attributed to transport costs for raw stock  materials and finished products. This emphasis on linkage analysis as the major in  trade  of  Weberian  location  theory  involved  the  central  idea  of  profit-maximizing firms being attracted to locations that minimized aggregate transport costs on all input (and output) flows (Scott, A.J. (1981) p.113). Firms would therefore  55  locate  either at resource sites, break-of-bulk points, markets or where  other firms  already existed. However, in subsequent modifications Weber included a theoretical analysis of how industry would incorporate a consideration of the given distribution of labour (with  fixed  differential  wage  rates across  the  geographic  surface)  in  its  location  decision, by introducing his concept of the "critical isodapane". As an extension of his orignal model, Weber proposed that the optimal location of the industry (determined solely  on the basis of total transport cost isodapanes)  savings were considered. If location at point "L" (see  could alter if possible wage FIGURE 3.1) entailed a wage  saving of five dollars per unit of output and lies within the  total transport' cost  isodapane which has the same value as the saving in labour costs (the five dollar critical isodapane), the firm will reduce total costs by locating at "L" rather that the original optimal location "O" (Smith D. (1981) p.72). This analysis presupposes  that wage differentials  exist at different  space due to unspecified unique supply-demand interaction characteristics (see  points in FIGURE  3.2), and that supply is perfectly elastic at any given point (note the horizontal supply curve) and immobile beyond that point. Consequently, Weber considered the cost of labour as a "regional" factor influencing the resultant geography of production, with the initial locational pattern set by transport costs, and subsequently distorted by spatial variation in the cost of labour (de Souza, A. and Foust, J. (1979) p.323). Although this rather simplistic approach ignores both the possible  effects on wages and the  relevance of other characteristics of the labour supply, Weber did realize that labour costs were not equally important to all industries in his concepts of a "labour index" (the average cost of labour needed to produce one unit by weight of output) and a "labour coefficient" (the ratio of the labour cost divided by the unit product weight to the total weight, of material and product to be moved) (Lloyd, P. and Dicken, P. (1977) p.211). The characteristics of the firm would influence the relative importance of  56  critical  Figure  3.1  The Effect of a Cheap-Labour on the T r a n s p o r t Cost Optimum in the Weberian Model S o u r c e : Based  Figure  3.2  on D. S m i t h  Location Location  (1981, p.72)  The Assumed. L a b o u r Market L o c a t i o n '0' and Location Model  Conditions at 'L' i n Weber's  57  labour as a locational factor. Weber also noted that industries strongly attracted to low labour-cost locations tend to become  concentrated  in few  locations.  The long-term  trend in decreasing  transport cost would tend to increase the relative attraction of labour cost savings locations  by  accentuating  the  general  predilection  of  manufacturing  activity  to  in  of limiting  agglomerate (Conkling, E. and Yeates, M. (1976) p.94). The assumptions  model of  must  uniform  be  considered  cultural,  rather  economic  and  tenuous political  the  light  characteristics  across  the  landscape, disregard for institutional barriers, and from the usual weaknesses encountered by partial equilibrium, least-cost approaches' which intrinsically divorce themselves from a  consideration  of  the  spatial  nature  of  demand  and  possible  ramifications  of  "explained" change. In summary, the treatment of labour in Weberian industrial location theory is similar to that of any other localized factor of production or input except that labour (and its geographic pattern of productivity) is assumed as spatially-fixed -  mobile only  within a daily commuting field. Unlike the prescriptives of neoclassical labour theory, residential  relocation and movement  of labour to the firm for varying wage and  employment opportunities is virtually ignored. The two approaches may be reconciled if the Weberian partial equilibrium analysis is viewed as only applicable in the immediate short-term. The firm is perceived as the dominant actor perusing the landscape of possibilities  for  labour  and  trading-off  the  various  costs  of  required factors  of  production to choose the optimal site.  2. CRITIQUES  OF WEBERIAN LOCATION THEORY ON LABOUR  Although most recent location theory acknowledges the limitations of simplistic Weberian models (particularly in regard to labour), the most concerted critique would, stem from the radical labour market theorists.  58 Given the centrality attributed to the conflict between labour and capital in structuring spatial outcomes in radical theory, this school heavily criticizes the Weberian emphasis on linkage analysis rather than the role of labour in the process of capital accumulation. The geography of industry is perceived as a prime consequence  of the  dynamics of accumulation rather than as a result of the static allocation of activities to their best location vis-a-vis markets, labour and materials (Walker, R. and Storper, M. (1981) p.481). The dependence of labour, on the activities of the production system for the sale of its labour power, is stressed in opposition to the simple view of the firm choosing from a number of labour-cost alternative sites. This difference probably stems from the moral rejection of the fundamental perspectives of neoclassical location theory oriented  towards  maximization  of  firm  profit  levels.  A  situation  of  mutual  interdependence between labour and capital (though the balance of power is seen as favouring  the capitalist)  observed spatial outcomes,  is posited  as a far more realistic scenario,  for explaining  than the unidirectional determinancy assumed in Weberian  theory. A. Scott (1983, p.234) rejects the focus on the structure of transport costs and the single-minded rationality of individual spatial behaviour and decision-making as a theoretical  formalism which has lost the sense of spatial relationships as structured  outcomes of the social logic of production systems (that is, capitalism in the Weberian era of relevance). Rather than assuming the "siting" decision or the location problem as the starting point of theory, Scott (1982a, p. 134) believes any legitimate explanation must  be  ground in  its  historical  context  Traditional  industrial location  theory  is  criticized for assuming the economic system as given (and fixed) therefore ignoring the unique historical setting  and the associated  (Massey, D. (1973) p. 183).  dynamic of the  "form of organization"  Space is framed in terms of political and institutional  space rather than just "abstract" space.  59 Processes operating in space (such as decentralization) would thus need to be examined  with  reference  to the  ongoing  process  of accumulation and technological  change. The production system itself would have to be related to a conception of capitalism as a set of human relationships built around the central mechanisms of 1) the labour process, 2) the distribution of economic surplus and 3) accumulation (Scott, A. (1983) p.234). The basis of neoclassical locational explanation rests on the existence of factor supply differentials (in quantity, quality, or real or expected price) resulting from the fact that the equilibrium has never been reached or has been upset by exogeneous forces. The static, limited perspective* of neoclassical location theory has been criticized on  the  grounds  differences  that  an  analysis  dealing  only  in these aspects, which are never  with  factor  supply  properly explained)  aspects (and  is bound to be  inadequate (Walker, R. and Storper, M. (1981) p.486; Massey, D. (1973) p.186). The actions of individual firms are thought to require interpretation at the level of the total economy where the forces which shape the space economy can be identified. The Marxian models of capitalist reproduction contend that capitalism is forever altering the basis for the industrial space-economy,  under the imperatives of capital  accumulation, regardless of the initial distribution of factor supplies -  by technological,  organizational and spatial changes. Both the location and conditions of factor supplies and markets could therefore be altered by the actions of capitalists and the effects of capital in general (Walker, R. and Storper, M. (1983) p.494). Spatial outcomes would be subject to the structural requirements of capitalist society to expand the reproduction of capital and maintain capitalist social relations. These requirements are seen to be ideologically embedded in the nature of neoclassical industrial location analysis (Massey, D. (1973) p.185). Although there is substantial criticism of Weberian location theory from, radical theorists, it is notable that many of his basic perspectives are still frequently utilized  60  in  radical  literature. For example,  movement  of  rationalized  in  explanations  capital  to  lesser  developed  terms  of  Weber's  of the  and  least-cost  restructuring and consequent  newly  criteria.  industrializing In  addition,  nations Scott's  intra-urban plant location theory is pivoted upon firm locational decisions  are  (1981) with an  explicit consideration of intra-urban spatial variation in wages (though his variations are primarily  based  on commuting cost differences  and he  does extend  discussion  to  include the effects of location on wages within the urban area). The  principal  radical  objections  to  neoclassical  location  theory  predicated upon the delimited scope of explanation (ignoring the  are probably  overall "logic" of  social and economic systems) and their intrinsically ahistorical and ideological nature. The  radical  "school"  also rejects the  neoclassical  conception  of  the  labour market  (necessarily implicated in traditional location theory) as discussed in Chapter 6.  3. DO "JOBS FOLLOW PEOPLE" ? Whether jobs follow people in search of suitable, high-productivity, or low-cost labour or whether  people  move  to the  location of existing  demand, has  been a  significant area of debate since the late 1960's and well into the 1970's. For evidence of Weber's treatment of labour, we would expect mobile firms to evaluate the relevant cost surface, and establish themselves in relation to the original factor supply spatial pattern. Thus (labour-dependent) firms would be expected to "follow" people. Alternatively, orthodox neoclassical  theory predicts that people will respond to  spatial wage differentials (as a function of employment opportunities) and long-term equilibrium will eventually occur through people moving to jobs. Marxian theory appears to be confused or at least flexible in predicting which actor actually leads the changes in spatial structure. The upper hand in resultant spatial relationships between labour and capital is clearly attributed to capital but one specific school of thought, the "capital-logic" school, contends that capital (being more mobile  61 thant labour) initiates and tends to lead labour migration (Clark, G. and Gertler, M. (1983b)). Other Marxian theorists would point to the movement of capital (at urban, regional and international scales) to utilize existing cheap or disorganized labour and would be aligned, in part, with Weber's conception of labour in the firm's locational decision. The empirical evidence on the direction of causality, at all geographic scales is unclear and probably reflects the fallibility of attempts to generalize across industries, time  and socioeconomic  evidence,  contexts.  contradicting that  of  In North America,  Kain  Steinnes (1977;  1982)  (1968) and Hoover and Vernon  found  (1959), that  manufacturing' jobs- decentralized before people at the intra-urban level. Hall (1984, p. 24) concludes that most evidence supports the contention that the suburbanization of people  has occurred before that of manufacturing jobs. However, the causality link  inferred by Steinnes (1982) is extremely difficult to prove particularly in recognition of the  expanding  improvements. assumed conditions.  to  spatial  range  of  Suburbanization of guarantee  the both  accessibility  Accessibility  journey-to-work employment  levels  considerations  higher,  trip  from  and residence or  equal  to  technological  cannot those  are probably a cost for both  in  even be previous  employers and  employees in the matching of supply and demand, but the influence of this factor, in relation to a host of other possible reasons for changes in relative spatial structure of the workforce and production activities, is very difficult to assess. Although preceded  the  balance  (manufacturing)  of  evidence  employment  causal link cannot be established.  suggests  that  residential  suburbanization (Kennett,  S.  suburbanization  (1980) p.97), the  Results obtained tell nothing about the effect on  specific groups within the city, which may not have (or not be able to) suburbanize, and for which the journey-to-work to changing employment locations  may be an  important factor on the. ability to find employment A more acceptable link between the suburbanization of supply and demand would probably be that of technological  62 change. Decreased transport costs may also be accompanied by a reduced dependence of firms on labour supply inputs  thus  eroding the  need  for a consideration of  accessiblity to large labour markets. For example, persistent excess levels of appropriate labour supply or greater capital-intensification could reduce the firm's necessity for high levels of labour market accessibility. In addition, the movement of people to the suburbs before manufacturing jobs does not indicate which actor is dominant in the labour-firm relationship. "Following" the other actor may give some advantage on past conditions or may simply be a necessity. At regional levels (where migration could be separated from those effects which have simply expanded the- daily commuting field) evidence  on the temporal  ordering and spatial structure of growth and decline in labour supply and demand, would probably be more meaningful. However, what research has been done at this level  is equally inconclusive and the lines of causality between capital growth and  labour migration are similarly plagued by the inevitable chicken-or-egg problem (Clark, G. and Gertler, M. (1983b)). Referring to aggregated employment demand, Long and DeArc (1983, p.41) contend that for the 1970's, population has tended to follow jobs from urban to rural settings. Even at international levels, migration has undoubtedly occurred in response to the growth of employment demand opportunity (for example, to British Columbia in the 1970's) together with the movement of capital in response to (and as a cause of) national and regional variation in labour supply characteristics. The only general conclusion that can be drawn from the "people follow jobs" or "jobs follow people" debate is that the distribution of the labour supply and its characteristics is important to the firm's locational decision subject to the particular requirements for employment demand. The firm may, or may not, make its locational decision on the basis of geographical variation in labour properties, depending on, the sectoral, intra-industry, and technologically-derived demand for this "raw material". The  63  particular historical process,  and the  context, state of existing  the  organization and form of  overall, and area-  and occupation-specific  the production labour market  considerations (such as excess supply or demand), would influence whether the required labour  input  was  treated  as  effectively  "localized"  or  "ubiquitous"  in  the firm's  locational decision. The frictional impact of space on the supply-demand matching process and the resulting relative location of employment demand and supply must be considered at a micro-level.  Understanding and interpreting the  processes which  change  the spatial  structure would, however, require explicit consideration of the dynamic total economic system and' the "forces" of change:  C. THE CONCEPT OF A "LOCAL" LABOUR MARKET -  VANCOIJVER CMA AS  THE STUDY AREA The  work of Weber, which includes an identification of spatial variations in  labour characteristics and the recognition of geographical constraints on the matching of supply and demand in labour economics,  exemplifies  the importance ascribed to an  integration of the spatial dimension into a realistic conception of the labour market particularly in the prevent  the  short-term. Some sort of limit on daily commuting fields will  acceptance  of  available  jobs  without  residential  relocation.  Residential  relocation itself may be constrained by a number of factors and increasing distance to available potential job destinations may well be related to information, certainty, cost, and hence the probability of moving residence. As a consequence,  space is likely to impede the job search process of the  worker and hence influence the length of duration of unemployment Spatial separation, as a direct cost and as an added barrier for effective information dissemination, could be hypothesized as a contributing cause to unemployment Even if residential mobility is possible  (as is explicitly assumed in neoclassical  economic labour market theory)  64  spatial boundaries need to be drawn around the exchange process in the short-run. Geography will therefore play some role in the understanding of the operation of the labour market and in explaining the existence of unemployment The appropriate scale at which spatial separation will result in job dislocation is a complex issue and remains a moot point between many labour theorists. The use of regional perspectives has been common in applying regional policy (for example, in the United Kingdom and Canada) as the framework for linking ad hoc policies aimed at tackling disparities Taylor,  in economic  J. (1983) p.311). This  conceive  of  economic  regional  economic  welfare level  development  theory  since  levels between regions  of  resolution  problems the  1950's)  as  reflects  basically and  accept  (Armstrong, H. and  prevailing  regional  attitudes that  in nature (as in  medium-distance  worker  migration as both possible and appropriate. However, without migration the Census Metropolitan Area (CMA) (or equivalent travel-to-work geostatistical areas in the United States and United Kingdom) is usually assumed as the functional unit within which space does not impinge upon the perfect operation of the labour market (that is, the CMA is assumed as the local labour market). Functionality is usually defined on a journey-to-work basis. Geostatistical units to represent local labour markets are usually determined on the basis of two concepts: the extent to which the area is self-contained  (measured  by the proportion of the resident employed population working locally and the day employed population living locally) and the strength of a given area's commuting links with other contiguous  areas (usually a gravity-type  equation) (Carmichael, C. (1978)  p.130). The Vancouver CMA comprises the focal study area for the following research undertakings. In the Canadian context, a Census Metropolitan Area: Refers to the main labour market area of an urbanized core (or. continuously built up area) having 100,000 or more population... They contain whole municipalities (or census subdivisions). CMAs are comprised of (1) municipalities completely or partly inside the urbanized core; (2)  65  other municipalities if (a) at least 40% of the employed labour force living in the municipality works in the urbanized core, or (b) at least 25% of the employed labour force working in the municipality lives in the urbanized core. (Statistics Canada (1981) 95-978) Thus the CMA is assumed  as being the relevant local labour market area  (LLM) within which any two points are an "acceptable" daily commuting trip length apart The underlying belief for this definitional basis of the local labour market is that  the  collective  daily  journey-to-work  interaction  patterns  of  a  metropolitan  population represent the spatial exchange relationship for all particpants in the urban labour market (Clark, G. and Gertler, M. (1983b) p.275). The local labour market which realistically defines the commuting capabilities of all, or a designated portion, of the  labour force has been proposed as the  ideal areal structure of  exchange for  effective targeting of intervention and monitoring of public policy (Clark, G. (1978a) p.2). The assumption and use of such travel-to-work areas (like the CMA), as the  leal  local labour market or catchment  area, has  been criticized on a number of  grounds. An inherent weakness in the use of a local labour market concept is that it implies a static, equilibrium context for the exchange process. Boundaries are identified as if they were contours of equal commuting in either direction (Cheshire, P. (1979) p.33). Cheshire (1979) argues that such lines are impossible to distinguish, except as "snapshots", given the dynamic nature of the labour exchange process under study. In addition, the local labour market (defined on journey-to-work functionality criteria) is incorrectly assumed as being a closed system -  reflected in the elimination  of existing interaction with contiguous areas. The rather arbitrary selection of levels, for defining  when  the  area  is  self-contained,  is  a  recognized  limitation  implementation of the LLM concept (Gordon, I. and Lamont D. (1982) p.239).  of  the  66  However, the arbitrary nature of definitions of the spatial extent of LLMs, would apply to attempts to demarcate the exchange process at any level of resolution. The  pattern of journey-to-work movements (if assumed as the true representation of  employment spatial range possibilities) interaction which may show  is a highly complex and dynamic system of  identifiable  concentrations of interaction density at any  given point in time but certainly has no distinct, objective and immutable boundaries. Destinations and origins are not sharply defined but are scattered, if unevenly, across the landscape. A  major criticism of  the  use  of  travel-to-work  areas,  as  LLMs,  revolves  around the acceptance of behavioural outcomes (that is, the' observed journey-to-work dimensions of the employed) as the sufficient condition for delineating areas of perfect (or at least unconstrained)  daily mobility. Not only  does this  imply the  existing  commuting pattern is optimal, but it fails to take into account the commuting range capabilities of those people who do not have a journey-to-work trip as a result of accessibility or mobility constraints. The  final  but  probably  most  poignant  attack  on  the  journey-to-work,  self-containment models of LLMs, is levelled at the implicit assumption of homogeneity in the levels of mobility of individuals within the demarcated area. Instead of passively accepting that every "unit" has uniform mobility (and unconstrained accessibility), this criticism is based on the contention that the spatial range of employment opportunities varies amongst particular social and economic groups (Dicken, P. and Lloyd, P. (1981) p.198). The travel-to-work based CMA is believed to reflect the commuting pattern of upper income, higher-educated and skilled suburban residents (with greater levels of mobility and capacity to travel long distances)  (Clark, G. and Gertler, M. (1983b)  p.275). Variations in mobility levels between socioeconomic groups are seen to be a result, of different group-specific capability constraints (based, on the resources available to  individuals such  as actual  or expected  income  levels and car ownership) and  67  coupling constraints (which define where, when and for how long the individual has to join with other individuals to produce, transact, consume or fulfil family roles) (Miller, R. (1981) p.4). Hence, some groups (those with more severe mobility constraints, would be unable to undertake daily commuting trips to every and any place in the CMA. For example, it is a well-established phenomenon that (in the United Kingdom) higher education level occupations and males tend to be more mobile than manual or female workers. (Carmichael, C. (1972) p. 130) If labour supply within the CMA boundary is heterogeneous in terms of the capacity  for movement  and is, in part, sometimes less mobile than the maximum  extent of commuting observed would- indicate; the generalized- definition of the LLM must  be  a  compromise  on  reality.  Ball  (1980)  has  suggested  that  metropolitan  travel-to-work areas in the United Kingdom are too broad and should be replaced by local authority districts as more meaningful areas of ease of access.  The possibility  of heterogeneity in the  spatial  ranges  of groups within the  labour supply has led some theorists to perceive the CMA as a set of discontinuous labour markets, dynamic in nature, and each with their own supply and demand schedules which could be circumscribed in space according to the appropriate nature of space-time constraints (resulting in very complex but transitory patterns) (Bederman, S. and Adams, J. (1974); Clark, G. and Gertler, M. (1983); Vipond, J. (1980) p.132). Under this condition, the CMA would really be a superset of overlapping labour markets divided along the lines of gender, age, occupational, income and other related social and economic characteristics.  One of the principal aims of this study is to evaluate the efficacy  of the  Vancouver CMA as a local labour market by examining possible geographic barriers to the daily commuter, and residential relocation, matching of supply and demand locations  68 -  at least for certain occupational groups (in particular, the manufacturing production  labour force).  The existence of geographic  constraints  within the  CMA would have  important ramifications for the implementation of effective policy aimed at facilitating or manipulating the adjustment of supply and demand. Of course, broad national (and even international) economic and social structural change would also be a vital consideration in assessing how unemployment arises as a malfunction of the equilibrium conception of the labour market and some discussion of the nature of these trends will be included in subsequent sections.  Chapter IV ANALYSES OF INTRA-URBAN SPATIAL VARIATIONS IN UNEMPLOYMENT Theoretical and empirical geographic studies of unemployment characteristics at the intra-urban level appear to be of fairly recent origin. Throughout the 1950's and 1960's, most labour market analyses incorporating the spatial dimension were applied at the  regional  level  and attempts at  explaining  unemployment  patterns  were usually  hinged upon the role of the regional industrial structure. Even among the ecological and social area analysis studies stemming from the Chicago school of sociology, unemployment characteristics received little explicit attention. The  emphasis, in this work, was placed upon segregation  "stable"  social  life-cycle  and economic  characteristics  such  as  of urban areas by more'  ethnicity,  occupation,  stage (Ley, D. (1983) p.58-72). Although some more  race and  "secondary" aspects,  such as juvenile delinquency, were considered in particular case studies, unemployment experiences  were probably conceived  more as  epiphenomena  of  the  more  essential  socioeconomic traits. Spatial variations in unemployment levels would therefore be little more than a byproduct of those processes (variously described by human ecologists and land economists) which acted upon the  "major" social  and economic characteristics  enabling distinctive socio-spatial patterns to be identified, within the metropolis. Among  the  earliest  detailed,  well-known,  urban  studies  utilizing  spatial  unemployment differentials were those examining the effects of major redundancies in industrial  employment  in the  United Kingdom accompanying its gradual decline in  world economic standing which started as early as 1900 in some sectors. The persistent high unemployment rates since the 1970's have instigated substantial research on urban unemployment The unequal negative impact of restructuring by industry on the inner city areas was the underlying theme of the Inner Area Studies (1977) in the United Kingdom and in associated works, such as those of Metcalf and Richardson (1976), Evans  (1976),  and  Cheshire  (1977;1979)  69  which  examine  and  discuss  intra-urban  70  variations in unemployment levels. One  of  the  major  concerns  in  the  studies  of  geographic  variations  in  unemployment (usually at either a census tract or local authority level) is the origin of the  distinctive  mosaic of unevenness. During  schools of thought  the  1970's, there  on the predominant causes of observed  emerged two major  intra-urban employment  differentials. On  the  assumption  that  a  major  portion  of  the  unemployment  pool  is  comprised of displaced industrial workers, the  "demand-side"  explanations argue that  there  unemployment  variations  are  direct  spatial  residence.- With the  causes of  observed  by  area  of  decline; and decentralization of industrial activity from' particular  urban areas (usually the inner city core areas), the appropriate labour force, which remains  residentially  "trapped"  in  these  areas,  is  believed  to  be  locationally  disadvantaged in terms of access to the new distribution of industrial activity. Longer 1  and less efficent job search and the greater costs of commuting to remote opportunities are posited as determinants of higher unemployment in the deserted areas. However, the opposing school's explanation of concentrations in unemployment is based on the housing supply characteristics of the urban area and broad economic changes beyond the isolated urban milieu. The cause of unemployment differentials is rooted  in  the  "supply" characteristics  of  particular socioeconomic  groups  who are  systematically allocated to the housing submarkets of the urban spatial structure. To schools,  in  some extent, an evaluation explaining  observed  census  of  the  tract  relative variations  efficacy in  of  the  two major  unemployment  in  the  Vancouver CMA, shall constitute a major research objective of this thesis. However, given that Vancouver CMA does not match the size, age, or industry-intensity of the decentralization is assumed here to refer to the process of spatial change generated by "centrifugal" forces, which result in a relative shift of population and/or employment away from the major urban cores (Kennett, S. (1980); Johnston, R.J. (1981)). The process is examined for industry in the Vancouver CMA context in Chapter 5 to establish if the necessary condition for demand-side explanations is present in the study area.  71  large traditional industrial areas where the explanatory power of the two schools may be more balanced, the research is undertaken on the accompanying rationale that a detailed examination of unemployment in the CMA, within a spatial perspective, will contribute to an understanding of the nature of this foremost problem in the study area context. This  chapter will  provide a brief synopsis  of the  existing literature  relevant to the "decentralization of demand" / "characteristics of labour supply" debate.  A.  THE CHANGING  SPATIAL  STRUCTURE  OF INDUSTRY  AS A CAUSE OF  UNEMPLOYMENT Concern for job dislocation resulting- from' geographic separation of the home and  workplace arose as a consequence  of the well-documented  relative decentralization of economic activity -  phenomenon of the  particularly manufacturing activity from  the inner city area. As proposed, the geographic explanations presuppose that industrial activity  is  a  major  source  of  employment  for  a  significant  portion  of  those  unemployed. If this is not the case, possible geographical barriers to the job-matching process for manufacturing activities, which may influence spatial unemployment variations in  manufacturing and associated  occupations,  would be unlikely to be a significant  factor in explaining total unemployment rate variations. However, the manufacturing production  occupations  do  appear  to  constitute  unemployed pool in the Vancouver CMA (see possibility of the substantive  a  major component  discussion of FIGURE  of  the  total  8.1) and the  existence of such geographic-structural unemployment is  entertained. The decentralization of manufacturing activity in . the CMA is examined in Chapter 5. The  "demand-side" school centres its argument on the flight of industry from  the inner city to suburban areas, and beyond, leaving behind an abandoned inner city pool  of  unemployed.  residence-based  Spatial  restructuring  is  seen  to  detrimentally  affect,  certain  sectors of society (Gillespie, A. (1983) p.180). Observed inner city  12  concentrations  of  the  unemployed  are  therefore  perceived  as  a  result  of  1)  inaccessibility (because commuting costs are too high for the daily commuting trip to new job locations) and, 2) a "housing trap" restricting the ability of this socioeconomic group (or groups) to residentially relocate to within an acceptable  daily, commuting  range of the suburban peripheral industrial destination areas. The "trapped" hypothesis purports that the  decline in inner city jobs  has created a residue  of low-skilled  unemployed who are unable to relocate because of either the costs involved (pecuniary and other) or the nature of their tenancy in the housing market (Elias, P. and Keogh, G. (1982) p.26). In many respects, this- argument aligns with the criticisms of the conception of travel-to-work  areas  supposedly  defining  large  metropolitan areas  as effective local  labour markets (LLMs). If suburbanization of industry locationally disadvantages residents of the inner city, the "ease of access" assumption of the CMA would be violated. The existence of geographic-structural unemployment (for certain occupations anyhow), within the CMA, would suggest that labour markets were, in fact, localized and that employment decline has led to deficient demand within the actual spatial extent of the labour supply-demand exchange process (Bramley, G. (1980) p.273; Vipond, J. (1980) p.132). The  increased  separation  of  homes and jobs  for  inner  city manufacturing  workers, as a constraint on job-matching, would be exacerbated by lower levels of car ownership  for  lower  occupation-skill  groups  (assumed  as  being  disproportionately  represented in manufacturing production activity) and by the requirement for reverse, non-radial commuting to suburban locations (Gillespie, A. (1983) p.183). It is important to note that, if the trapped hypothesis is to be regarded as a possible major direct cause of observed unemployment differentials, there has to be an underlying assumption that total labour, supply and demand requirements are approximately equal  for the  CMA as a whole. There is little evidence of this necessary condition in the British  73  context (Gillespie, (1983) p.182). Inaccessibility  and housing  entrapment tend to be  more widely  accepted as  determinants of inner city unemployment concentration in the United States than in British urban areas (Gordon, D. (1972); Metcalf, D. and Richardson, R. (1976) p.202). The  racial  dimension  of the  United States appears to play  explaining this disparity (Gillespie, A. (1983) p.181;  a significant  role in  Kain, J. (1968)). The McCome  Commission report declared that high levels of unemployment, from the inadequacy of public transit services in overcoming home-work separation, was a significant factor in provoking the  1965  race riots in Los Angeles. De Vise's (1976) study of Chicago  found that the rate of job decentralization from inner to outer city areas • was more than twice the employed resident decentralization rate (over the period 1960-1970) thus reducing the accessibility of inner-city blue-collar workers. His results also indicated a net commuting outflow of blue-collar workers from the inner city illustrating that reverse Chicago's  travel  patterns.  The  commuting had become  exclusion  of  inner-city  blacks  a major feature of from  new suburban  housing, coupled with lower mobility in reverse commuting to decentralized factory jobs, was proposed as conferring a major employment disadvantage on this group. In their exploratory study in Los Angeles, Wachs and Kumagai (1973, p.450) identified  lower accessibility  for low-skill primary, machine trades, and bench work  occupations to their appropriate employment destinations than for professional, technical, clerical,  sales  and  service  workers.  suggested as being accentuated  This  initial  accessibility  by car ownership patterns.  disadvantage  was  also  In addition, Wachs and  Kumagai found that low income workers were less accessible to jobs (for that income category) than for the highest income group to their opportunities. However, workers in the low income range were more accessible to their work than the middle income groups to their employment  74 Bederman and Adams (1974) examined the relationship between job location and employment  in  Atlanta  to  assess whether  areas  of  underemployment and poverty  matched those of low job accessibility. Unlike the other studies supporting accessibility limitations  on  inner  city  (aggregated-occupation)  residents,  the  areas  of  highest  accessibility  to  employment were found to be those with the highest rates of  underemployment Although the five employment centres used covered only 32% of jobs and destinations were not analyzed in terms of the appropriateness of jobs available, Bederman and Adams conclude that the variation in underemployment is not explained by  the  accessibility  of  residential  tracts  to  job  centres  and  that  reasons  for  underemployment and poverty in the inner city would have to be sought elsewhere. Although, in the U.K., there is some evidence of housing mobility constraints operating disproportionately on the bottom-end of the occupational-skill spectrum, the "demand-side" (inaccessibility and decentralization) thesis is not well supported overall. Gillespie (1982, p.182) notes that while the number of manual jobs in the U.K. city cores declined substantially over the period 1966-71, the number of resident manual workers declined by a larger amount and at a faster rate. In fact core job surpluses actually increased slightly over the period. Thus the necessary condition for accessibility impediments to job matching is not fulfilled at this generalized level in the U.K. Hall (1981, p.2) proposes that the  deprivation of many inner city areas is  sustained and reinforced by a vicious circle of poor jobs and poor housing via the joint  operation  of  a  technological-employment  trap  (technology  removing  existing  potential jobs) and a housing trap (from people being afraid to move to new job sites, having inadequate information, and being restricted to rent-controlled housing). According  to Cheshire (1979, p. 36),  the  renowned Inner Area  Studies (1977) of  Liverpool, Birmingham and Lambeth, all espouse variants of the "trapped" hypothesis claiming the large numbers of unskilled workers have, as a result of inferior mobility, become incarcerated in the job-deficient inner city as industry has decentralized, and  75 have  thus  become  ensnared  in a vicious  circle  of  unemployment  and immobility  (similar to Halls' "vicious circle"). He provides an example from the Liverpool study which claims that the 100,000 new manufacturing jobs (from regional policy) have been predominantly located on the periphery of the Merseyside conurbation out of daily commuting  range  of  the  inner  city  unskilled.  However,  N.  Thrift  (1979, p.178)  highlights different conclusions from the Inner Area Studies reports, quoting paragraphs that  do  tend  to  indicate  an  acceptance  of  geographical  variations  unemployment rates as directly attributable to non-geographical  in intra-urban  factors such as the  occupational structure of the residential labour force. Bramley's (1980) contribution- to the- Lambert studies discusses the' existence- of real  barriers to emigration for  the  less-skilled  and lower-paid due  to uncertainty  coupled with relatively higher rents and housing payments at residential areas near employment  growth destinations.  The necessity  for the  use  of  cars for access to  suburban job locations was also considered as a constraint on the low-income inner city residents. One-quarter to one-third of inner city residents expressed a desire to move  out  for  various housing  and environmental  reasons  but were prevented by  housing cost considerations. Studies in London by Berthoud (1980, p.240) also provide some evidence on the  limited  nature  of  housing  mobility.  While  two  percent  of  managerial  and  professional households were found to move for job reasons in a year, a scant 0.4% of semi- and unskilled manual workers did the same. Less than one in five manual workers would ever move for job reasons in their working lifetime. However, in his analysis  of travel time to work-areas (for  occupational  groups), the  three manual  groups were found to have slightly lower journey times than either of the non-manual groups. Although this outcome  suggests greater accessibility  for the  manual worker,  Berthoud discusses how the positive, association social class and car ownership, and the necessary dependence of manual workers on public transport or foot, would mean a  76 relatively  smaller  geographic  range  for  the  manual  worker in  his  or  her daily  commuting trip for a given length of time. The radial focus of the transport network was also considered as placing further constraints on the job choices (many being located in suburban areas) of the manual worker. Berthoud refers to Daniel (1972) who  found that,  when  male  manual workers were made  redundant in south-east  London, their new jobs involved an increase of 23% in journey-to-work times together with a 15% decrease in real earnings. Gillespie's (1983, p.182) findings at the U.K. national aggregate level contradict Bethoud's journey-to-work disadvantage for the manual worker. His calculations indicate that "core" to "ring" journeys for semi- and unskilled manual workers have remained 1  a constant proportion of total work trips for that group (for the period 1966-71) whereas, for skilled manual workers, reverse flows were shown to increase slightly in importance. Although this phenomenon could reflect greater capability constraints on the less skilled, Gillespie concludes that the various studies do not lend much support fo the "accessibility crisis" hypothesis (admittedly only for his relevant study period) and subsequendy renounces the possible efficacy of isolated transport improvement solutions. Several hypothesis"  other  studies in the  as an explanation  U.K. stand  directly  opposed  to  the  of intra-urban variation in unemployment  "trapped  rates. The  majority of these studies favour the supply-side explanations as adequate alternatives. Cheshire (1979, p.36) evidence  criticizes  the  to support their assertion  Inner Area  Studies  for failing to present any  that the unskilled had become  trapped by the  changing pattern of industrial employment Metcalf (1975) and Metcalf and Richardson (1976) reject the importance of area characteristics in explaining unemployment on the grounds that no association could be found  betwen  London  boroughs'  employment  in  manufacturing  in  1966  and  the  unemployment rate in 1971. In addition, greater variation in unemployment rates (for inner versus outer metropolitan areas) would be expected  for unskilled, than other  77  groups,  if  differential  locational  advantages  were  operating.  However,  Metcalf and  Richardson (1976) found no more variation in unemployment rates of the unskilled than for the other groups. Evans (1976) obtained similar results indicating systematic differences in observed unemployment rates. Some areas of London (for example, outer Inner London) were found to have higher than national unemployment rates at all skill levels. Joan Vipond (1984) ran a multiple regression analysis on census tract data (for Sydney, Australia in 1981) to reveal a positive unemployment gradient, with distance from the CBD, after the influences  of spatial variations in characteristics of workers  had been removed. This result supported her' hypothesis that increased spatial" frictions, from decreased accessibility and greater resistance on information flows with increasing distance  from the  CBD, would increase  the length  of the job search process. To  Vipond, the positive unemployment gradient is evidence contradicting those U.K. and U.S.  studies  emphasising  spatial  causes of  inner-citv  unemployment  Although her  regression results reaffirm the traditional importance of workers' personal characteristics in  explaining  significance  of  unemployment  differences,  geographic-structural  the  (and  intra-urban unemployment variation patterns -  overall frictional)  results  are  supportive  unemployment  in  of  the  explaining  only the observed pattern is different in  the Australian context In Canada, the problems of job dislocation from the relocation of industrial plants from the City of Toronto to outlying municipalities beyond community range of displaced workers, have been addressed to some extent (see City of Toronto Planning Board (1975)). However, this study focuses on the effect of relocation beyond the Metro Toronto boundary and could not be conceived as a test of the local labour market effectiveness of the Metro Toronto area (though geographic mismatch at broader scales is stressed as the problem, for specific groups). The research did reveal that older workers and low-wage employees experienced the most difficulty in finding new  78 work but  the  results  do  not  help  to  isolate  the  relative  explanatory  power of  accessibility constraints versus housing and personal characteristics in regard to spatial variations in unemployment within the urbanized area.  B.  INTRA-URBAN  UNEMPLOYMENT  DIFFERENTIALS  FROM  PERSONAL  CHARACTERISTICS OF THE RESIDENTIAL LABOUR SUPPLY The variations  other major school in  intra-urban  of thought on the  unemployment  levels  fundamental causes of observed  upholds  the  role  of  personal  characteristics of the residential labour supply as the key set of factors behind this mosaic of unevenness. Stated' simply, unemployment is perceived to be high in certain areas of the city (such as the inner city) because low-skilled workers, who are prone to high unemployment live in the cheap (low-income) housing of those areas (Vipond, J.  (1980) p.131). The observed pattern would then be just a consequence  low-income  housing preferences of  of the  "unemployables" and those that recurrently suffer  unemployment spells. Inner city areas, in particular, are often held to be areas with a high percentage of residents vulnerable to unemployment (Corkindale, C. (1980) p.181). 2  Spatial concentrations of unemployment are thought to reflect concentrations of people with certain characteristics (such as age, skill level, race and family situation) which, in turn, reflect the impact of the housing system on residential location patterns (Bramley, G. (1980) p.273). People would be allocated to the differentiated landscape of the housing market on the basis of their socioeconomic and cultural characteristics and related needs and constraints. The form of the housing market itself would be the result of  complex  historical processes and an underlying "rationale" by participant  decision-makers. This approach implies that the relevant urban area is a single spatial labour market which may, however, be linked to non-spatial aspects of segmentation -  There is a considerable body of evidence intimating the propensity for low-skill occupations to suffer longer durations, and more frequent spells, of unemployment This evidence will be examined, in part, in Chapters 7 and 8. 2  79 particularly the  dual labour market thesis (Bramley, G. (1980) p.273). The spatial  structure and its influence on the labour supply-demand adjustment process is ignored. To some extent, the conclusions of the Lambeth Inner Area Study (1975) do facilitate the supply-side explanations. Although they propose that people are possibly trapped in the inner city because they cannot afford to move out or commute, the alternative explanation is considered when people are also seen to, perhaps, c]lQQS£ to live in this area because housing is cheap or available (for renting) (Corkindale, J. (1980) p.169).  However,  the  fundamental  contention  of  the  personal characteristics  explanation is that, if people are trapped, they are trapped in low-income housing, iM. the location of this housing- does not impinge upon the job search process- and: accessto available jobs. This school is, therefore, passing on the actual explanation of the observed variation in unemployment rates by residence  to those theories  and models which  attempt to explain the urban housing structure. Unemployment traits would just be ancillary aspects of those more fundamental socioeconomic and cultural characteristics which are seen to guide households to particular areas of the housing market (though there  is an obvious direct and confounding association  between unemployment and  income levels). The original attempts at accounting for intra-urban spatial variations in land use (and values and intensity) further  developed  economists  (such  stem  from the work of Von Thunen (1826) and were  throughout the as  Haig  twentieth  century by Hurd  (1926)) and the  (1903) and the land  Chicagoan human ecologists Park and  Burgess (1925) and then Hawley (1950) and Firey (1947). In the 1960's, Alonso (1960), Wingo (1961), Mills  (1967;  1969)  and Muth  (1969) developed  the  models widely  accepted (and criticized) in the contemporary analysis of intra-urban land use. The key concepts in Alonso's model are accessibility (to a city centre assumed as being the only source of employment) and the income available to households.  80 Increased  distance  from this  centre  would  imply reduced accessibility  and greater  commuting costs which, in turn, would reduce the amount remaining for a household to spend on property. This setting: ...produces a bid-rent curve, portraying the amount of money which people are able to afford for land with increasing distance from the city centre. Individual housholds can choose where to live on this curve: each has an indifference curve indicating its relative preferences for the two elements of the equation. Alonso assumes that all households want as much land (space) as possible; land is more plentiful on th edge of the city, as well as being cheaper, so it is the rich who choose to live in the lower-density outer, wheras the poor are confined [emphasis added] to inner-city districts (where relative increases in commuting costs have less impact). (Johnston, R.J. (1981) p.9) Therefore, the poor (who are more vulnerable to unemployment) would end up living at high densities on expensive land near the city centre as a result of the income-derived trade-off betwen space and accessibility to work. The concentration of unemployment in the inner city areas would then exist even in the  face of high  accessibility levels to. the assumed central focus of job opportunities. The supply side explanations of intra-urban unemployment variations have been supported by many British theorists (1975) -  in the wake of the early Inner Area Studies  mainly in response to evidence against the demand-side approaches.  As described, Evans (1976) rejected the that  unemployment  occupational attributed  a  groups  rates in  were  the  major part of  exceptionally  outer the  Inner  "trapped" hypothesis on the grounds high  London  differences  in  for area.  both  unskilled  and  Corkindale (1980,  residential  unemployment  other  p.  184)  rates  to  variations in the structure of the labour force between boroughs (the inner boroughs having a higher percentage of unskilled, manual workers). In support of Evans' work, he  found that, in general, there  differentials  (within  socioeconomic  was n_ obvious tendency  for unemployment rate  groupings)  in  to  be  higher  inner  versus  outer  boroughs thus concluding that the concentration of the unskilled and out-of-work in inner areas was probably derived from the operation of the housing market  81 After dismissing the potential spatial causes of unemployment variation because of the absence of a relationship between the percentage in manufacturing in London boroughs in 1966, and the unemployment rate in 1971, Metcalf and Richardson (1976) applied a multiple regression analysis of the (selected) personal characteristics' make-up of the boroughs on the 1971 male unemployment rate. They found that variations in the male residential unemployment rate, between boroughs, could be well explained by individual characteristics -  especially marital status (married men being less likely to be  unemployed), number of dependents (in a positive relationship with unemployment rate), and the the proportion of unskilled workers (positive relationship). Once these variables were controlled for, age, ethnicity, and area characteristics (proportion of labour force 1  in manufacturing in 1966 and number of redundancies before  1971) were apparently  unrelated to 1971 unemployment levels. By  extending  the  model  to  include  some  "wealth"  Richardson found that boroughs with a high percentage tended  to have  low  unemployment  rates and that  variables,  Metcalf and  of owner-occupied dwellings  the  unskilled tend  to  live in  low-rent housing. Because direct accessibility variables were not incoporated, the outright rejection of a relationship between accessibility and the probability of unemployment is questionable. A study by the Northern Region Strategy Team (1975) also indicated that skill, and  age,  were  the  most  important  factors  making  an  individual  vulnerable  to  unemployment Overall, the housing effect explanation has probably gained the most favour in the British urban context Inner city problems are seen as occurring because individuals who suffer labour market disadvantage live disproportionately in the inner city because therein lies the largest stock of cheap housing (Metcalf, D. and Richardson, R. (1976) p.202).  On the  other  hand,  inner, city  unemployment  in  the  U.S. is commonly  attributed to employment suburbanization, housing segregation, inadequate public transport  82  systems, poor labour market information and discrimination. Cheshire  (1973; 1979)  also acknowledges  that supply-side  characteristics,  the  "logic" of the urban structure, and patterns of residential location are very important for explaining intra-urban unemployment disparities. However, he questions the utility of studies focused solely on the supply aspects on the contention that implications of differences in the observed personal characteristics of the unemployed are impossible to identify  and that personal characteristics  of  the  unemployed, in one  spatial labour  market, actually tell nothing about the causes of unemployment The characteristics of the entire labour force are seen as being more persuasive for an understanding of unemployment- rate variations. Although  demand differences  are  admitted  to  play  only  a  minor role in  explaining high relative inner city unemployment Cheshire (1979, p.32) stresses that demand  characteristics  of  a  particular town  or  region  are  crucial  in  explaining  unemployment variation over time and hence the h'igh absolute level of inner area unemployment in the 1970's. To Cheshire, supply factors (that is, factors determining the quality of an area's labour supply) which are important in explaining intra-urban unemployment differences.  differences,  should be  far less influential  perceives  long-term  unemployment  He  in determining inter-urban  differences  between regions and  towns as the outcome of long-term differences in the spatial pattern of excess demand for labour (or regional demand deficiency) (Chesire, P. (1979) p.36). At this level of "determinancy", crises of the inner city areas (particularly in the  U.K.) can  employment  be  demand)  traditional dependence  seen  as  sectors  crises  of  the  manufacturing  (Thrift,  N.  (1979)  p.175).  The  (or  other  inner  city,  low-skilled with  its  on low-skill production or service jobs to match its typically  high proportion of low-skill workers has been described as an "open economy" highly senstitive to the  rapid transmission, of economic  fluctuations  from other, regions or  countries. The strucural transformation of the economic base of Britain (mirrored in  83 varying degrees throughout the capitalist world economy) would lie at the heart of worsening inner city unemployment problems. Hall (1981) describes the inner cities of Britain as extreme versions of the economic woes of the country. Hence, although it is likely that persistent long-term supply characteristics (of socioeconomic groups and the housing system) are responsbile for relative inner city concentrations of unemployed, the absolute magnitude of variations in unemployment rates would be a result of profound changes in the nature of prevailing economic systems. A recognition of the profound influence of "exogeneous" effects at national and international levels, where broad structural changes have a differential impact on the regional levels of demand for labour, implies a shift' in emphasis to macroeconomic perspectives in order to understand urban labour market phenomena. The futility of isolated, local, piecemeal policy to reduce urban labour demand and supply "mismatch" problems (as in the inner city), without an explicit consideration of the changing nature of the Western economic system and the "processes of social equality", appears to be gaining considerable acceptance (Thrift, N. (1979); Cheshire, P. (1981); Elias, P. and Keogh, G. (1982) p.30).  One of the principal aims of the thesis will be to examine which of the aforementioned explanations of intra-urban unemployment variations is most appropriate to the Vancouver CMA. The research results obtained should enable a comparison of this Canadian city with the urban environments examined in Britain and the U.S. If the supply-side explanation is supported, the original causes of unemployment would have to be located somewhere in the far broader macroeconomic interpretations. However, the suburbanization of industrial activity is a necessary condition for the demand-side explanations (and a significant aspect of broad economic explanations) and  evidence  on  the  existence  and nature  of  this  Vancouver CMA study area in the following chapter.  process  is  examined  in the.  Chapter V  THE DECENTRALIZATION OF INDUSTRY IN THE VANCOUVER CMA  A. THE PROCESS OF DECENTRALIZATION 1.  GENERAL TRENDS The  rapid centralization of population and economic activity experienced with  the onset of the industrial revolution continued to be the major spatial trend until well into the twentieth century. The radical technological changes which powered the urbanization  process  favoured  the  strategic  -  concentration  of  the  burgeoning  goods-production sector and its required labour force. These areas of spatially-clustered economic offering areas  activity  and population  acted  as  self-reinforcing  magnets of  growth by  a range of agglomeration economies to firms within small, centralized core  whose  boundaries  were  rather  narrowly defined  by  the  relatively  expensive  transport and communication costs of the relevant time period (Myrdal, G. (1957)). 1  However, during the twentieth century (particularly in the latter half), a number of countervailing forces have emerged to stimulate a reversal in the dominant process. The  decentralization  of  population, and many  forms  of  economic  activity,  at the  intra-urban, urban to rural, metropolitan to nonmetropolitan, regional, national and even international scales has been well documented as a pervasive phenonemon in Western mixed economies (see Dicken, P. and Lloyd, P. (1981) p.155-168). Although there has been some evidence  of an incipient decentralization of certain manufacturing activity  sectors since early in the twentieth century (de Souza, A. and Foust, J. (1979) p.234), it was not until the 1950's that the suburbanization of the residential population and certain forms of economic activity was recognized as a distinct and entrenched process.  'This process of concentration stimulated by agglomeration economies would only apply to those firms for which the benefit of an existing urban core location more than offset cost advantages of a non-urbanized, raw material site. 84  85 The  massive  suburbanization  of  the  residential  population  after  the  Second  World War, in many nations, is linked to a range of motivations and causes which vary  according  to  the  perspective  adopted.  Undeniably, government  housing  policy  targeted at home-ownership (and inspired by Keynesian macroeconomic theory) and the technologically-invoked  improvements  in transportation, communication, productivity and  related increases in community wealth, played prominent roles in the formation of the low-density  urban residential  sprawls  which  characterized  the  post-war  period  (see  Chapter 6 for some of the radical perspectives on residential suburbanization.) The  other  decentralization  major  (and  the  element  of  most relevant  the  urban  aspect  for  system  undergoing  this paper)  substantial  has- been  that of  industrial activity. There has been a very pronounced redistribution or relocation of secondary  activity  away  from its  traditional location  in the  inner  cities of large  industrial metropolitan areas to a variety of more peripheral settlement areas. This phenomenon is of major importance to the research objectives of the thesis, both as 1)  the  underlying factor  in the  proposed  spatial  causes of unemployment  in the  "trapped hypothesis" and 2) as a notable aspect of the production process changes at macroeconomic levels which have indirect, but critical, implications for the nature of the  outcome  of  regional  and  local  labour market operation  (and  hence  for  the  supply-side theories of unemployment rate variation). The "Frostbelt- Sunbelt" regional shift of productive capacity (and people) in the U.S., is frequently monitored, analyzed and discussed as the prototypical illustration of the decentralization process (Cohen, Y. and Berry, B. (1975); Gertler, M. (1984) p.155; Norton, R. and Rees, J. (1979); Phillips, R. and Vidal, A. (1983) p.297). The onset of nonmetropolitan metropolitan  industrialization (the  areas to  rural  and smaller  identified  by many researchers.  increase  in  U.S.  relative  decentralization  urban areas),in  For example,  manufacturing  employment  of industry the  between 1962 took  place  from major  U.S., has  and 1978, in  rural  also been  56% of the and  other  86 nonmetropolitan areas (Norcliffe, G. (1984) p.27). In Britain, similar changes in the geography of industrial activity have been identified. Keeble (1976) concluded that there was a core to periphery movement of manufacturing at the regional scale because the growth in manufacturing employment between 1966 and 1971 was inversely related to city size and positively related to 1) the perceived desirability of cities and 2) whether or not the region had "assisted area" status. In their regional shift-share analysis for the period 1959-1971, Fothergill and Gudgin (1971) observed that the  Southern and Midland  regions of the U.K.  showed the fastest growth (though less marked for manufacturing alone) while London suffered a decline in total and manufacturing' employment growth. Monitoring decentralization processes at the international level is a far more difficult problem - particularly in terms of evaluating the extent of actual relocation of productive capacity  from the  traditional core industrial nations to the "developing"  nations of Latin America, Asia, Oceania, and Africa. The shifting of investment capital through the international capital markets and the operation of multinational corporations (both mechanisms are primarily post World War II phenomena) is often conceived as the major impetus behind the relative decline of the First World nations as producers -  especially in the older "smokestack" industries (Multinational Monitor (1984)). The  output of manufacturing industry grew far more quickly in the "developing" nations than it did in most  "advanced" nations  (Jordan,  B. (1982)). In  fact,  from  1970  onwards, there was a relative stagnation in manufacturing output in many "developed" nations.  The redistribution in the  geography  of  manufacturing output  towards  the  industrializing Third World (particularly for low-skilled manufacturing "branch plant" functions) could be framed within the context of a relative decentralization of industry at the international level.  87  2. THE CENTRIFUGAL FORCES UNDERLYING DECENTRALIZATION The underlying causes of the dispersal of industry from its central area location have received considerable emphasis in research and theory over the past twenty years. In order to avoid undue repetition of some impressive existing accounts and summaries of the major factors proposed as the forces behind this pervasive process, a review of the alternative explanations shall only be included in Appendix A. This list has been compiled on the basis of Scott's (1982a, p. 123) replete description which has only been  modified in part to account  decentralization  phenomenon.  The  for several  factors  are  other possible  not  necessarily  determinants of the mutually  exclusive  or  compatible but represent an ad hoc listing of propositions from a variety of theoretical and methodological perspectives. In addition, as Scott (1982a, p. 121) has stressed, most of  the postulated explanations  do not stand alone as final causes and do not fit  within comprehensive, integrated broader theoretical contexts (that is, they are essentially a-theoretical)  and tend to form a piecemeal listing of changes which would favour  non-central locations. However, perhaps the most powerful common determinant of the listed factors would be the effect of technological and organizational innovation on both the specific nature of  the  production process  and the  relative  costs of  factors  of production  including the costs associated with linkage requirements. Technological change could be perceived as directly initiating increased land requirements, the reduction in transport and  communication costs (which previously tied the firm to clustered core locations),  and  shifts  to  transport modes  (such  as  trucking) -  outcomes  which  enable and  encourage peripheral locations. It could also be linked to the economic concentration, and  functional specialization, and possibilities  for separation, which have resulted in  function-specific locational requirements which are often no longer optimally fulfilled in the core  area. The changes  in the production process  (and. associated  employment  demand) and the evolving geographic pattern of required labour supply (which has  88 been strongly affected by technological change) have also been proposed as providing a dynamic set of locational considerations often  reversing the centripetal tendencies of  earlier times. Obsolescence  of  central  plant  and  equipment  is  an  obvious  product  of  innovation. Even changes in the land price gradient could be at least partly attributed to the technologically-invoked transformation of the economic base and "highest and best use" possibilities  for inner city versus suburban sites. The impact of technology  appears to seep through to almost every aspect considered as "pushing" industry from the core and "pulling" it to the peripheral areas. Only a simplistic conception firms,  the  exacerbation  of  of physical constraints- on expanding- inner city  negative  externalities  with  city  growth,  variation  in  municipality policy and taxes relating to housing and industry, interest group lobbying, and changes in the collective bargaining power, or militancy of labour would escape  djieci  association with the changing nature of technology.  2  Probably traditional  the  models  most  of  elaborate,  industrial  integrated  location  lie  treatment within  of  decentralization  in the  incubation, product cycle, and  hierarchical filtering theory (Hoover, E. and Vernon, R. (1962); Norton, R. and Rees, J. (1979); Struyk, R. and James, F. (1975)). The theory (actually an amalgamation of three  related theories) places  prime emphasis  on explaining  the  differing locational  requirements of firms, and in particular, product lines, as they evolve in response to demand requirements. The inner city is conceived as the safest place for the nurturing of new and innovative firms dependent on the agglomeration economy benefits of this area. As they become self-sufficient increases  for  the  product  and  and stable (if they survive), or as the market  standardization  becomes  viable,  the  firm  increasingly independent of the central city and is likely to be "spun off  becomes from the  Changes in the nature of the labour process, and labour relation, from technological and organizational innovation, and the effect of increased auto use and transport improvements factilitating suburbanization, and the expansion of firms initiated by technology-based changes, would have to be discarded. 2  89 incubating central area to the suburbs or down through the urban hierarchy. The theories have  been  criticized  for their  intrinsically static nature,  labour aspects, and failure to go much beyond the  investigation  underemphasis of  on  formal spatial  relationships (Scott, A.J. (1982) ;Webber, M. (1982)). The relevance of some of the appended list of decentralization factors will be assessed in the following description of the changing geography of industry within the Vancouver CMA.  B.  INTRA- METROPOLITAN  DECENTRALIZATION  -  THE  CHANGING  GEOGRAPHY OF INDUSTRY IN THE VANCOUVER CMA The and  intra-metropolitan decentralization  of manufacturing industries (and tertiary  quaternary activities to some extent) has paralleled, if not preceded, the similar  trends found at larger geographic scales (Dicken P. and Lloyd, P. (1981) p.155-158). Movement from the inner city area, to suburban peripheral areas, beginning since the early 1900's, but accelerating in recent years, has been instantiated in many geographic studies. In the U.S.A., numerous case studies and U.S. Bureau of Census Data analyses have revealed the pronounced tendency for manufacturing (and associated blue-collar) employment to shift from the inner city to the suburbs (Struyk, R . and James, F. (1975); Berry, B. and Kasarda, J. (1977); Kain, J.(1968)). Although at a lesser scale than manufacturing, office  and service suburbanization has proceeded at an increasing  rate since World War I I (de Souza, A. and Foust, J. (1979) p.234). A plethora of studies in the U.K. have also monitored the decentralization of manufacturing activity output and jobs from inner city regions (particularly in London) (Drewett, R . , Goddard, J., and Spence, N. (1976); Dennis, R . (1978)). The process of decentralization, (along, with outright "deaths" of industrial firms) has been attributed as major causes of "deindustrialization" of traditional manufacturing  90  core areas (Phillips, R. and Vidal, A. (1983) p. 291). The loss of industry from these core areas can result in the creation and exacerbation of social and fiscal problems (such as unemployment, job dislocation, and reduced municipal tax revenues without similar declines in needed expenditures) in traditional manufacturing core cities. The urban industrial decline phenomenon has had profound negative repercussions in many of  the  older industrial cities and constitutes a key problem addressed  in urban,  regional, and national economic development policy (particularly in the U.K.). Manufacturing value-added and employment statistics for individual municipalities (when available) were extracted from the Statistics Canada, "Manufacturing Industries of Canada" data, at the sub^provincial level, calculated as a percentage of the total for the CMA, and plotted on the maps shown in MAPS 5.1 and 5.2. Vancouver City  3  has lost about 18% of both the total CMA manufacturing  employment and manufacturing production value-added over the period 1964 to 1981. Although it still has the largest share of both these variables, it has lost its relative share  of  manufacturing  municipalities of  employment  Richmond,  eastern arm of the  and  value-added  primarily  to  the  suburban  Delta and Surrey and to Port Coquitlam around the  Fraser River.  Burnaby has encountered  slight increases  in its  portion over this period while New Westminster has lost approximately 4.5% of the total share of the CM A's  manufacturing employment and value-added. While North  Vancouver has experienced slight increases in its share of manufacturing activity, West Vancouver's tiny proportion in 1964 was virtually reduced to zero by 1981. The pattern of manufacturing production employment change for the component municipalities is shown in MAP 5.2.  4  There are some inconsistencies between the percentages calculated for the two years as some of the statistics were not available for all municipalities. However, figures have been adjusted to take account of missing data where possible and the major trends, should still be fairly accurate. "Statistics for Coquitlam, Maple Ridge and Pitt Meadows, were not available for both years, due to confidentiality criteria and were hence omitted from the calculation.  3  S o u r c e : Compi.l ed f r o m S t a t i s t i c s  Canada 31-209  S  VANCOUVER  CMA  Map  5•2  The  Distribution of Manufacturing Production Employment  Langley  0. 1 X 1. U Z  S o u r c e i C o i r . o i l e d f r o m S t a t i s t i e s "Canada  31-209  C.  93  Absolute changes in the number of jobs for manufacturing production workers are fairly consistent with the relative distributional changes. Both Vancouver and New Westminster suffered absolute losses over the 1971-81 period. Vancouver City lost 7.6% of its manufacturing production workforce (1724 jobs) and New Westminster lost 7.1% of its manufacturing production employment (265 jobs). The municipalities which gained the bulk of new jobs in industry were Richmond and Surrey which together accounted for almost 50% of the increase. Other suburban municipalities each captured between 2% and 10% of the net gain in employment. The rate of growth was quite spectacular in  Langley C. (297% increase),  Langley D.M. (132% increase)  and Port Coquitlam  (203%). Vancouver City and New Westminster were the original areas of settlement and the hub of early industrial activity coalescing around the railway lines and along the waterfront (MacDonald, N. (1973) p.142-151). False Creek and the area along the harbour to the east and New Wesminster (with its sawmills, and fish cannery) were the dominant industrial areas of the region until the  1960's (Hardwick, W. (1972)  p.126). Although these areas could only be seen as traditional core manufacturing areas at a far lesser scale than the older core areas of cities of the "manufacturing belt", decentralization, from Vancouver City in particular, has occurred in terms of a decrease in their combined relative share of manufacturing employment and value-added -  from  over 65% in 1964 to only about 45% in 1981. The concentration of industrial land use in Vancouver City in 1955 is illustrated by the plot of industrial land use activity, at that time, in MAP 5.3. The absolute growth rate of the industrial sector in Vancouver City has been very slow over the last two decades. Between 1968 and 1976, the City actually lost 123 acres of industrial land use (an average of 1.1% per year) and manufacturing employment fell by 2,500 jobs in the period 1966 p.7-9).  to  1972  (City of Vancouver Planning Department (1977)  95 After World War II, the population sprawled in the Lower Mainland area and new manufacturing plants, especially the larger ones spread eastwards along the Fraser River and into the suburban areas (Walker, D. (1980) p.219). MAP 5.4 shows those areas of the CMA which either gained or lost industrial land use over the period 1955-1983.  s  Apart from the loss of some scattered  areas in West Vancouver and  Richmond (some of which could be a result of inaccuracy in the original land use maps used), False Creek has been the most significant area of industrial land use to be  displaced  in  the  Vancouver  CMA. The  loss  of  industrial  land  use  and  manufacturing employment (which declined by 6,000 jobs from 1966 to 1978) in both absolute quantity, and relative proportion- of the CMA total, supports the notion thatVancouver City has been undergoing a sustained reduction in its importance as an industrial  centre  since  the  late  However, manufacturing shipments  1960's (DPA Consulting Ltd. (1981) Table (adjusted  in line  with the  D-l).  Canadian C.P.I.) did  increase slightly (by 20%) over the period 1966to 1981. By the early 1970's, Steed (1973, p.239-40) described the^geography of industry in the Vancouver CMA area as having a high proportion of suburban manufacturing associated with the rather specialized locational requirements of a few large plants. The wood processing and paper mills were located along the waterfront areas where .their input and water needs could be easily provided and the export nature of their output could be satisfied by the capability for port facilities. Fish processing plants could be found in Richmond, shipyards in North Vancouver and chemical plants and petroleum refineries at the eastern end of Burrard Inlet Steed described the suburbanized pattern as heavily influenced by firms which, for the most part, required large tracts of land,  Although "industrial" land use covers wholesaling, warehousing, distribution and construction activities in addition to manufacturing, processing and fabrication in the previous discussion of manufacturing, this measure is the only sutiable indicator of land use available. It is important to note the limitations of an analysis, of industrial, activity changes by illustrating the simply aggregate areal changes shown in MAPS 5.3 and 5.4. These areas mask variation and changes in use intensity (of output and employment) and variation in specific industry types within their homogeneous spatial expression. 5  97 waterfront and some isolation due to pollution problems. The decentralization of industrial land use in the CMA, since 1955, is clearly ilustrated in MAP 5.4. The map showing the spatial distribution of industrial land use in 1955 (MAP 5.3) highlights the role of Vancouver City as the industrial centre of the CMA prior to the 1960's. The period from 1955  to the early  1970's, was a time of drastic physical  change and land use instability in the region with considerable demolition of inner city neighbourhoods  (Ley, D. (1980) p.254). The outflow  of industry  (around  to  growth  1963  1972)  was  accompanied  by  the  of  from False Creek Port  Moody,  New  Westminster and North Vancouver and the prolific suburbanization of industrial land use in Richmond, Delta, Surrey and to some extent, Burnaby. These changes (up to the early 1970's) are consistent with Guy Steed's (1973, p.255-257) study findings on industrial land use  activity  in the  Greater Vancouver  Regional District (GVRD) from 1954 to 1967 -  the eastward shift from the core, the  decline  growth  of  the  False  Creek area, the  rapid  in  North Vancouver, and a  considerable expansion in suburban industry areas. However, after the early 1970's, the decentralization  of industry to outlying suburban municipalities was by far the most  pronounced aspect of industrial land use change and this trend suggests that industry has tended to locate (or relocate) at even greater distances than those involved in the more modest extensions of the earlier period. In the high economic growth context of the 1970's, physical constraints on land availability and high land values in Vancouver City reduced the appeal of the central area  for  potential  or  expanding  industry.  The  environmental  awareness preferences  dominant in the late 1960's and the early 1970's also contributed to the "pushing" of industry from its traditional stronghold (City of Vancouver Planning Department (1977), p.7.9  ; Roy, P. (1981) p.146). The increased  horizontal  plant  layout  requirements  demand for land by industry, from  of modern production techniques and increased  98  employee  auto  use  and parking needs, meant  that land constituted  a greater cost  component in the firm's investment hence exacerbating this negative aspect of the city area. Increased demand by commercial uses (which can generally outbid industry for available land) has also raised land prices and added pressure for rezoning away from industrial uses (Tennant, L. (1977) p.56). The rezoning of 400 acres of industrially-zoned land in Vancouver (from 1968 to  1976), civic  residential,  efforts  commercial,  provisions and tax  to convert False Creek and  incentives,  recreational and the  uses,  from an industrial area to mixed suburban  municipal  industrial  "balanced growth" strategies of the  park GVRD  "Livable Region Plan" have all played a vital role in the decline of core industrial areas and the  growth of suburban industry. P. Roy (1980, p. 134)  saw the False  Creek transition as "symbolizing Vancouver's emergence as a post-industrial city". The decisive influence of social groups and institutions in directing the nature of industrial development in the city illustrates the potential for social perceptions and "meanings of place" to act back upon the spatial structure and spatial distribution of the economic base. In more recent times, the City of Vancouver Planning Department has been adopting strategies to preserve and maintain a strong industrial sector. The guidelines of the "Economic Strategy for Vancouver in the 1980's" and the creation and possible implementation of two new (light) industry zoning schedules ("1-1" and "1-2") are oriented toward the achievement of a more stable environment within which industries can operate and develop (City of Vancouver Planning Department (1983) p.18). Fears of negative economic repercussions from continued industry loss (particularly in times of economic recession) may well be currently outweighting the environmental concerns of the past The construction of additional bridges across the Fraser River, and reduced linkage costs acting to reduce the accessibility  disadvantages  of the periphery, have  99  allowed a number of  "pull"  factors  to draw new and relocating industries to- the  suburban areas (as shown in MAP 5.4). Industrial land values in the. suburban municipalities have been far cheaper than those in the city -  ranging from less than $1 per square foot in Delta and Surrey,  to $18 per square foot in Vancouver City (in 1976)  (City of Vancouver Planning  Department (1977) p.7.10). The existence of cheap large parcels of land, available in the suburban areas, and the shift of the "market centre" towards the south-east (to near  Port  Mann  Bridge)  away  from  Vancouver CBD (due  to  strong  residential  suburbanization in the 1960's and 70's), have stimulated the industrial decentralization process. In summary, there appears to be considerable evidence that the decentralization of industrial land use, manufacturing employment and manufacturing value-added, is occurring away from the traditional core area of Vancouver City and New Westminster to the suburban municipalities (particularly since 1970). The • process is probably not as pronounced as in the large older metropolitan industrial core areas of the U.S. and Europe.  Vancouver has  never  been  a  heavily  industrialized  urban area  over  its  relatively short history of settlement and the original industrial sectors were not focused exclusively on an identifiable large, dominant "inner city" area. The export-orientation and "upstream" nature of resource exploitation and production activities have always relied heavily on transport locations (such as those along the many waterfront sites of Burrard  Inlet  False  Creek  and  Fraser River) rather  economies and high central market access features area.  than  on  the  agglomeration  of .a concentrated industrial core  Chapter VI RADICAL INTF.RPRFTATIONS:  THF. RESTRUCTURING OF CAPITAL AND THE  ' LABOUR MARKET The  purpose of this chapter is to provide a brief synopsis of the significant  field of radical theory on the labour market (and hence, on unemployment) in order to acknowledge the Marxian-based explanations of unemployment Selected aspects of these radical interpretations will be examined to gauge their relevance or applicability in  the  British  Columbian  setting  (in  Chapter  9)  with  specific  reference  to  the  manufacturing production employment sector. The  existence of institutional and spatial constraints on the ideal neoclassical  models of the labour market have already been discussed in Chapter 3. However, since about  the  mid  1970's,  there  has  emerged  a  vigorous  growth  Marxian-inspired theoretical (and to some extent empirical) analyses  in  the  use  of  in geographical  literature. .One of the central concerns of such radical theory in geography has focused upon the role of labour in capitalist economies. The rapid increase (throughout the 1980's) in  the  volume  of  radical  works salient  to  the  labour market makes  it  appropriate to address this (rather loosely) unified view which probably constitutes the major,  singular  school  diametrically  opposed  to  the  fundamental  assumptions  and  perspectives of neoclassical interpretations of the labour market  6  The selection of the neoclassical and radical labour market models for review is not meant to imply that these two perspectives encompass the appropriate theoretical literature in its entirety. Existing models of the labour market and the labour process include a number of other conceptions (such as labour queue theory, labour exchange models and those framed within industrial sociology studies) but many of these draw heavily on, and involve only minor modifications to, the quintessential views of the neoclassical or radical schools. To some extent it is also true that the radical and The Marxian-based criticisms of Weberian location theory were briefly outlined in Chapter 3.B.2. 6  100  101  neoclassical conceptions do agree on, some basic theoretical relationships, motivations of actors and treatment  of the labour "problem" and one  has to move  to "higher"  epistemological, ethical and aetiological levels before major disparities become obvious. The  variety  of  perspectives  within  the  Marxian-based  interpretations  also  complicates the execution of a concise review of radical labour market models (Kirwan, R. (1981) p.79). Within geography, the influence of Marxian thought ranges from the more  rigid,  holistic,  structuralist  interpretations  inspired  by  Althusser (1969; 1976),  Castells (1977) and the French School of structural marxism to the somewhat more flexible  interpretations of theorists  such as Massey and Meegan (1978; 1979), Clark  (1977; 1978a; 1978b; 1978c; 1979a; 1979b; 1981a; 1981b; 1983a), Gertler (1984), Scott (1980; 1981a;  1981b; 1982a;  1982b;  1983a; 1983b; 1984)  and Walker and Storper  (1981; 1983) who use many of Marx's philosophical orientations and concepts in their analyses of aspects related to the labour market and the effect of restructuring and locational strategies of capital. However,  the  differentiation  is  largely a matter of  degree. The organismic orientations which portray capitalism as having an "inner logic" (inner laws of transformation), with each. part functioning to preserve the existence and general structure of the whole, abound in the works of Castells (1977), Peet (1979) and  Harvey (1978)  and  appear  sporadically  throughout  the  less  orthodox  radical  theory.' However, outside the formalist theoretical structuralist readings of the political economy, structuralism has been  deployed much less restrictively (and rigorously) to  connote a concern with the historically-specific and deep-seated constraints which set the limits to human action (Johnston, R.J. (1980)). Although primacy is attributed to "capital"  and  the  operation  of  a  capitalist  economic  system  perpetuated  by  a  socially-reproduced set of social relations, and the effect of "capital" on the economic base or structure, many of the current Marxian geographical works could be more See Duncan and Ley (1982) for a comprehensive critique of structural marxism in human geography. 7  102  accurately cast in structuralist-realist terms. This general theme would be purported in the explanation of the phenomena • of human geography as lying in hidden mechanisms rather than in the phenomena themselves and would involve both the underlying "structural" relations and their inner logic (of which human actors are largely unaware) and human agency and contingent circumstances  which  generate the  actual  events of  everyday  life  (Storper,  M. and  Walker, R. (1983) p.27). The prescriptive tendencies of capitalism are adopted without the inviolable determinacy of the economic structure of Marxist dogma (Badcock, B. (1984) p.53). In addition, the renunciation of empiricism by Castells (1977) appears to be implicitly rejected in the considerable body of research, undertaken throughout the 1980's, in an attempt to assess the evidence for and against radical theory constructs versus other models (for example, see Clark (1981b; 1983b; 1984) and Scott (1983a; 1983b; 1984)). In some respects, the adoption of more appropriate modern conceptual schema and the heavy revision of original Marxist theory could be conceived as iconoclastic. However, despite these modifications, the lack of consensual theoretical formulations, and a  surprising lack  of  internal  recognition,  the  "radical"  school  could probably be  collectivized on the basis of a number of common axioms concerning the structural relation between social institutions and groups within capitalist society and in relation to the way they  "read" the dynamic form of the social and spatial structure of  economic organization. This  chapter  will  outline  the  common  themes  of  the  "neo-Marxian"  perspectives, specifically in regard to the operation of the labour market and is aimed at illustrating how the radical geography orientation fits the overall Marxian mode of social  theory. It is not meant to be a summary of the diverse  and voluminous  encompass of Marxian theory in general. A brief review of the major radical critiques of the neoclassical  model will be followed  by a limited summary of the school's  103  conception of the socio-spatial relationship. Finally, but most importantly, a synthesis of the contemporary Marxian-based theory on the restructuring of capital and the spatial structure of industrial activity is presented as an example of the radical explanation of the true dynamic form of the labour market in capitalist societies.  A. THF RADICAL CRITIOTJF. OF THF. NEOCLASSICAL LABOUR MARKET The attacks on the neoclassical labour market from the radical school cut across many disciplines and would require a review of massive proportions to provide a truly representative account. However, given the weaknesses of arbitrarily attempting to isolate and synthesize a few key subject areas, the following list should outline some of the major points of contention.  1.  THE  MECHANISTIC.  ANTI-HUMANIST  NATURE  OF  NEOCLASSICAL  APPROACHES There are at least two major sets of objections to the neoclassical conception of  people  as  decision-makers and participants in the  labour marker,  espoused by  radical theorists. Firstly, there appears to be some consensus on an implicit underemphasis in the role attributed to labour aspects in neoclassical economic theory. The importance of labour in the processes of change stimulated by class conflict, and as the sole source of  surplus value, elevate the worker to a central status in Marxian economic theory  designed to analyze and understand the operation of the capitalist economic system. Walker and Storper (1981) argue for the primacy of labour considerations in the decision-making process of firms (assumed as being structurally-dominant over labour) in industrial location theory, on the basis of an assumed priority of cost, control and reproduction characteristics of the labour force.  104  The treatment of labour (in geography and economics) in a market like that for any other  commodity, and as simply one  production,  rejected  is  on  the  basis  of  of  both  a variety of supply factors of  moral  grounds  and  as  a  gross  simplification of labour devoid of its crucial role in exchange and consumption (Cooke," P. (1980) p.544). The abstraction of labour as a commodity, rather than as people's existence, and in aggregate, society itself, could thus be seen as carieaturizing society as a supply factor for the utilization of the firm rather than giving society its deserving key role. Criticisms  of  the  minor role  attributed  to  labour as  an  element  in the  production system are also accompanied by a related, second set of objections opposing the dehumanization of labour as a passive factor of production to be manipulated and exploited by the firm. Under the radical conception, labour is a unique factor of production which is, by nature, embodied in human beings, and is consequently alive, conscious and antagonistic to domination by capital (Walker, R. and Storper, M. (1981) p.498). The nature of labour market structuring and outcomes at a given time and place are seen to be ultimately the result of power relations rather than' the product of neutral principles of supply and demand or other mechanistic economic principles (Clark,  G.L. (1983a)  p.2).  A  consideration  of  the  historically-specific  mode  of  production and social relations defining worker behaviour is perceived as paramount to a proper understanding of the labour market operation. Although  some  radical  interpretations  adopt  the  stance  of  the  complete  subordination of labour to the structurally-dominant whims of capital (a perspective which aligns with classical economic theorizing), the "bilateral relations" school within radical  theory  conceives  of  workers  as  entering  agreements with employers (Clark, G.L. (1983a) p.2 social  relations  of  production  would  define  the  explicit  and  implicit contractual  ; (1983b) p.166). The existing collective  determine the nature of wage and employment outcomes.  power  of  labour and  105 Hence the labour market would be a far more restrained market than that for any other productive factor given the emotional, physiological and routinized capability and capacity constraints of the "commodity" in question (Cooke, P. (1980) p.544). As an antagonistic,  inconsistent  input, human labour would not fit the fixed laws and  parameters of mathematical modelling applied in marginal utility and other deterministic aspects of  neoclassical  economic  theorizing.  This  criticism  is  akin  to  those from  behavioual and humanistic geographical perspectives on the inadequacy of the "economic man" concept used to establish the rules for human behaviour in normative neoclassical model assumptions.  8  If  radical  theory  drawing on  Marx's  works  is  to  be  perceived  as more  humanistic in orientation than neoclassical economic theory, it would probably have to be related  to Marx's approach in earlier publications such as the  "Economic and  Philosophic Manuscripts" (1844) concerned with the nature of capitalist society creating alienation (Johnston, R.J. (1983) p.92  ; Lavine, T. (1981) p.274). This early Marxist  work clearly expresses a moral or humanistic viewpoint which has, as its fundamental theme,  the  moral  regeneration  of  humanity  through  world revolution.  The more  scientific socialist or economic theory of history Marxist approaches to some extent eclipse this theme and have been criticized as anti-humanist for neglecting the social and  psychological  accounting  aspects  of  lived  experience  for human action and, therefore,  (phenomenological  change  in the  dimensions)  in  larger system at hand  (Duncan J. and Ley, D. (1982) p.45). However, if a humanistic orientation can be considered in terms of the concern for human welfare and dignity, the radical approach does inculcate such a perspective in 1) attributing priority to the welfare of labour (as society) over the maximization of returns to the  unevenly  distributed ownership  of capital, 2)  in the  more realistic  The critique of the robotic creature of "economic man" conceptions, and his or her idealized behaviour, by no means stems exclusively from radical theory and will not be attempted in the discussion. 8  106 treatment of labour as an animate, intelligent contributor to the production process, and, 3) in expressing the improvement of the condition of human society as a direct, fundamental goal (rather than implicitly, as a byproduct of. facilitating the production process controlled by the firm).  2. THE IDEOLOGICAL NATURE OF NEOCLASSICAL ECONOMICS Within neoclassical value-free  its  positivist  economic  mode  treatments  typical  of  of  labour  most  are  conventional  thought  to  economic  be  undertaken  analysis, on a  basis like that of the mimicked natural sciences. The approach generally  involves the determination of the mathematical, economically-efficient  optimal condition  or the natural equilibrium outcome to be derived given the prevailing economic system (usually  idealized  and  abstracted  considerably  from  reality).  The  application  of  mathematical physics to human economic behaviour (inaugurated by Francis Edgeworth in  the  1880's) has been recognized by non-Marxist and Marxist scholars alike, as  rationalizing  the  mathematics  in order to justify  p.169). With  tenets of  people  conservatism  as its  and as operating  divisions of sex  subject  as a calculus of human  and status (Heilbroner, R. (1972)  matter (though  in dehumanized form) and, in  dealing with matters that will inevitably have social ramifications, the possibility of a value-free  economic  approach  is  highly  questionable.  Any  economic  study  would  necessarily be a study in political economy. To spin-off  much  disciplines,  of  radical  fulfill  theory,  neoclassical  an ideological  role  economics,  and  its labour-related  by nurturing and legitimizing market  capitalism (Badcock, B. (1984) p.26). The bulk of theory is seen as being oriented toward  the  formulation  of  strategies  that firms should,  or  actually  do,  use  in  maximizing their profits, and, for the orthodox Marxist theories, the only way to do so is to increase the rate of exploitation (or surplus-value) derived from labour. Its natural inclination is, therefore, conceived as being anti-labour.  107  There disciplines  is  such  evidence as  of a pro-capital bias to be found in  labour  economics.  Distributional  and  neoclassical-based  normative  issues  are  convenientiy disregarded as beyond the scientific approach implemented (Fleisher, B. and Kneisner, T. (1984) p.13). The evils of wage rigidities and union actions are frequently claimed as the  major cause of unemployment (Addison, J. and Siebert, W. (1979);  Fleisher, B. and Kneisner, T. (1984) p.469; Marsden, D. (1982) p.240). Minimum wage levels and inflated  reservation wages from unemployment welfare and insurance are  considered to either raise wage levels above the value of the marginal productivity that the worker can offer the firm, or prevent the worker from accepting a low-paying job in line with his or her marginal productivity. There is also an emphasis on the expected mobility of labour in response to the economic efficiency  locational choices of firms in labour economic literature and  conventional labour market studies.  9  For example, Employment and Immigration Canada's  (1981, p.46) publication on labour market economic policy states: A primary purpose of labour market policies is to facilitate more smoothly functioning labour markets by increasing mobility from regions and industry where demand and productivity are low to expanding sectors with a minimum of wage pressure... to ensure that avilability of labour will not impede realization of our economic potential. The underlying assumption is that people should move to jobs. Most of the solutions resulting from neoclassical economic reasoning are pivoted around the removal of wage rigidities and the facilitation of the "invisible" hand of the  labour market operation by increasing  labour mobility and encouraging human  capital investment to increase worker marginal productivity as the only true method of increasing real wages (Addison, J. and Siebert, W. (1979) p.387 and p.391). According to Marsden (1982, p.240), such free  market policies  act as an ideology  to reduce  worker power to oppose the operation of dominant financial interests.  'However, this perspective diverges with the treatment of labour in Weberian industrial location theory and the assumed movement of firms to exploit cheap labour supply sources.  108 The  superstructure  of  capitalism  is  seen as  being  underpinned  intellectually  (often unwittingly) in economic textbooks, thus ensuring its perpetuation, preserving the status quo, and masking the deeper processes of class exploitation (Badcock, B. (1984) p.26).  3. STATIC AND NARROW CONCEPTIONS OF THE ECONOMIC SYSTEM Another major facet of the radical critique of the neoclassical models is focused on their essentially ahistorical nature. The neoclassical economic world is basically devoid of long-term change in the conditions and forces that govern the labour supply-demand matching process. Cultural factors and historically-specific social conditions are assumed not to alter the nature of the immutable forces tending towards equilibrium and any dysfunction would be the result of institutional  blocks primarily bestowed by the  actions  of government and  unions. Technological short-term  focus,  innovation can proceed to increase  the  production function  defines  the  productivity but possibilities  within the '  and the painless  substitution between labour and capital inputs will occur consensually on the basis of factor price and marginal productivity differentials. However, radical theory usually rests on the essential Marxian social theory of historical materialism which would emphasize  the  dynamic nature of conditions that  influence the labour market For example, relations which determine the wage level are seen as social  relations which change  importance  of  the  contraposed  to the static conception of neoclassical  historical  over time (see  context in the  Marxian  section 6.A.5). The profound analysis  would stand directly  models and has been recognized  (amongst radical theorists) as probably the most valuable offering of Marxian analysis (Badcock, B. (1984) p.175). The historicism interpreted in many Marxist works has been criticized by, among others,  Popper (1957) in his  rejection  of large-scale  laws of  109 historical development. However, the importance of the historical approach has been embraced in much of the radical literature (for example, see D. Gordon, (1973), A.J. Scott, (1982a) and _ M. Webber, (1982)) without the underlying historicism described by Popper. Whereas long-term equilibrium and consensus  are the  basic axioms of the  timeless, neoclassical models, the Marxian-based interpretations contend that the labour market cannot be isolated from its unique social and historical context -  an integrated  setting that is believed to be "evolving" over time as the result of j'_nilici between social groups. In Marx's time, the conflict ensued primarily between the working class labourers and capitalist owners of industry. However, in more modern radical treatments of the capitalist system, the argument has been adapted as the struggle between labour and management, or, between those primarily dependent on selling their labour power for  economic  survival  (labour), and those  responsible,  or directly dependent upon,  maintaining the institutionalized system (capitalism) and whose function is to maximize the return to investment capital (that is, the owners and managers of capital). Thus the entire economic system and social relations of production are seen to evolve over time as a result of  the  drive to accumulate and class  Marxism asserts the priority of capital in these social dynamics.  10  conflict, but  (Walker, R. and  Storper, M. (1981) p.475). Technology reasons.  Firstly,  is  imputed a critical  technology  can  be  role  conceived  in Marxian as  a  analysis  significant  for two major  component  of  the  definition of the labour process at any particular point in time. Its fundamental link to the level of individual and social wealth (and therefore financial support alternatives and  levels),  the  nature  and  quantity  of  employment  demands,  and  the  spatial,  organizational and scale characteristics of the work process, is seen to provide the very  "Neoclassical theory implicitly accepts the primacy of capital in its analytical orientation. This is reflected in the stance adopted - from the perspective of the firm in its profit-maximizing decision-making context 1  no fabric for the  labour relation and the bilateral power outcome. The workplace or  production process at a given moment, is seen to be a society in miniature shaped by the relevant technology (as the way nature is transformed by human action) and the class character of capitalist production (Storper, M. and Walker, -R. (1983) p.29). However, technology struggle  is seen as both  the  outcome  and the basis  of class  and workplace relations. Motivated by competition and the imperatives for  capital accumulation, technological change (for example, capital intensification) held  to  (Storper,  be  a weapon utilized by capitalists  M. and  control-induced  Walker,  M. (1983)  innovation  (rather  to reduce worker power and reward  p.29).  than  is often  the  In  radical  "labour  priced-induced  process"  technical  studies  change  of  neoclassical economics) is given a central role. Non-technical and technical aspects of work organization are conceived as managerial tools for breaking worker militancy and, in turn, the strength of worker bargaining is considered as affecting the course of technological  development  This  perspective  aligns  with  Marx's  original  belief  in  technological innovation and the deliberate creation of mass unemployment (a "reserve army of the unemployed") in order to undermine bargaining power and keep wages down (Marsden, D. (1982) p.240). However, technology has also been attributed as the most important factor in the resilience of capitalism -  by allowing standard of living improvements over society  as a whole through increased productivity (Malecki, E. (1983) p.90). The key role attached to technology in radical theory is a far cry from the models  of  neoclassical  economics  where  technology  is  simply  appended  to  the  equilibrium outcome descriptions. Under its short-run perspective, technology is assumed fixed and technical substitution between labour and capital is thought to occur in appropriate  response  to  changes  in the  relative  costs of  these production factors.  Treatment of technology in the longer-term is quite limited and neoclassical theory tends to  bypass  issues such as  the  relationship between technological  change and  Ill unemployment  Through  the  price  mechanism  and  the  presumed  ease  of  factor  sustitution, technological change is considered to cause only temporary departures from equilibrium (Standing, G. (1984) p.131). The orthodox Marxian theory predicts a long-run trend towards a rising organic composition of capital, through technical innovation, associated  with a decline in the  average profit rate. Although this prophecy would not be wholeheartedly supported by all radical theorists, the general tenor of radical theory favours the acceptance of each technologically-based  historical period, and the related relationship between labour and  capitalism, as unique. The capitalist economic system is seen to be in constant flux and particularly noticeable periods of marked economic base or organizational change are denoted as involving "restructuring" or more euphemistically the "rationalization" of the economic system. This is thought to occur at the firm or sectoral level but in the aggregate,  entails a discernible, unidirectional change in the very nature of the  capitalist production system. Within standard neoclassical theory, however, there is no account of structural change and aberrations from equilibrium conditions are described in terms of cyclical phenomena (the "business cycle" being the most popular conception). The explanations of  cyclical movements  in  the  amount  of  business activity  ("business cycles" and  "Kondratieff long-waves") are usually defined- in reference to degree of utilization of productive resources accumulation  as  and were basically  passing  through  cycles  derived from extended of  productive  Marxian  expansion  and  theory on contraction  (Standing, G. (1984) p.131). Cyclical (or demand-deficient) unemployment was named on the basis of faith in the cyclical nature of business acitivity with an expected  return to equilibrium  conditions in the long-term. But to the radical theorists, there is a basic restructuring or evolution of the capitalist system over time which involves transformation to a new stage of development (Walker, R. and Storper, M. (1981) p.489). The dynamic in this  112 model is seen as a product of the struggle between labour and management The struggle is pictured as occurring in a structured employment relation played out on a dynamic "chessboard" with a varying pattern, rules and powers for the actors involved -  ascribed  by  the  evolving  state  of  technology  and  related  social  relations  of  production. Another  related  aspect  of  the  radical  attack  on the  ahistoricaf neoclassical  paradigm concerns the narrow scope of factors used for explanation and assumed as influencing the original models -  even at a given point in time. The stripping away  of  major variables  reality  to  the  hypothesizeed  assumed  to  operate  under strict  behavioural axioms within a perfect environment is pursued in order to apply rigorous mathematical modelling (under partial or general equilibrium perspectives) or at least to attempt  the  "rational" prediction of changes  in endogeneous,  or from exogeneous,  variables. The problem with the idealized, simplistic models is though to lie in the arbitrary selection of factors directly incorporated in the models and the sacrifice of an understanding  of  the  real  and  changing  causes  of  phenomena  observed  for  mathematical, "scientific" rigour in explanation and prediction. The tendency  for neoclassical  economic fields (such  as labour economics)  to  remain fearfully within their allocated discipline ignores the complexity of the real world. Often only a very narrow part of the social and economic context is considered in the neoclassical search for causality. For example, the role of the labour supply as the consumer of the output of goods and services, as well as a factor of production, receives  very little attention  in neoclassical  economic theory. Consumption is usually  reduced to an aggregated lump as an independent variable in national income equations or as a function of real disposable income (for aggregated, homogeneous households) in macroeconomic theory. In microeconomic labour theory, labour is simple treated as a supply factor.  113  Factors  which  have  not  been  included  in  the  operational  universe  of  hypothesized models are labelled as "exogeneous" and existing models usually account for these factors only in regard to how the included variables will respond to their influence. Frequently, exogeneous events involve aspects that the economist can't count or measure and, therefore, by definition, don't fit within mathematical models of the globe (Cohen, D. and Shannon, K. (1984) p.43). In labour economics, the principal study area of labour in neoclassical  economic  theory (particularly for microeconomic  theory), the models used for other commodity markets are applied to labour and any factors which disturb or distort its operation (for example, technological change) are proclaimed as belonging to a mixed bundle of  "exogeneous" influences  and hence  outside the field of direct relevance and are dismissed from further explanation. Many aspects of neoclassical economic model building have been criticized for their failure to examine the full context of influential variables. Bergman and Goldstein (1983, p.264) argue  that modern neoclassical  regional  economic  development  theory  ignores the influence of the ownership and control of industry and the changing nature of the international division of labour. Clark (1981a, p.566) challenges the utility of the "Phillip's Curve" 1) on its implicit assumptions of the homogeneity of the labour force in which workers are hired and fired on the basis of their contribution to total output and, 2) in assuming away the complexity of production requirements and the interdependence of labour and capital in the wage and employment contract However,  radical  conceptions  of  labour  are  held  to  be  superior  to  the  constrained, static realm of the neoclassical world because they recognize the importance of  historically  perspective, historical  unique  involving spheres  of  frameworks sociological, study,  is  on  the  dynamic  philosophical, adopted.  mathematical rigor is considered worthwhile.  The  labour  relation.  An  eclectic  economic,  human  geographic,  and  trade-off  between  complexity  and  114  4. EQUAL AND FRF.F. CHOICE TN LABOUR MARKFT SUPPLY DECISIONS An  assumption of the  households  relative, and equal, autonomy  in their labour supply decisions  literature.  This  perspective  is  reflected  pervades  in  the  of all individuals and  most of the labour economic  theoretical  and  research  emphasis  involving the job search process, the ease of worker mobility, and the role of the individual in deciding on his or her occupational level (and hence future wages). Although there is some recognition of differential constraints acting on certain individuals and groups on the basis of their existing wealth, labour market knowledge, number of children and other related factors, such aspects are given very little explicit theoretical treatment in labour economic theory (Fleisher, B. and Kneisner, T. (1984) p.465). One  immediately apparent weakness of the choice assumption in microeconomic  labour theory is the conception of labour supply (or the number of hours supplied) as being determined by the wage rate (and non-employment income) rather than by the basic  need  standards. supplied  to obtain employment The  ignores  generally the  positive  likelihood  for economic relationship that  a  survival and maintenance  theorized  reduction  in  between the  wages  relative  of living and hours  real  wage  is  accompanied by an increase in the labour hours supplied to the market to support the worker and his or her family. As  previously discussed  in Chapters 2 and 3, the major longer-term labour  market barriers envisaged in neoclassical econ