Good jobs exist everywhere in the UK – but the highest-paying roles remain heavily concentrated in London and the South East, and a small number of cities. Structural change has reinforced these patterns, raising difficult questions about how policy can help to spread opportunity more widely.
This article is part of an upcoming collection on good jobs by the Policy Hub for the Huth Initiative for a New Political Economy.
Good jobs are not just jobs that pay high salaries. But high pay is one important, and observable, dimension of many good jobs. And on this dimension, good jobs are concentrated in a small number of places because highly skilled workers and productive firms benefit from clustering together.
In 2019, around half of the working-age adult population in Brighton and London were graduates, compared with around 15-18% in places such as Doncaster, Grimsby and Mansfield. The highest-paying jobs are even more spatially concentrated than graduate employment more generally (Overman and Xu, 2024).
These patterns have been reinforced by the shift towards knowledge-intensive industries, the rise of superstar firms and the growing importance of agglomeration economies.
What makes a job ‘good’ – and where are good jobs concentrated?
Beyond salary, good jobs offer security, autonomy, opportunities for progression and a voice in the workplace (Cominetti et al, 2023). Good jobs may also give workers opportunities for self-development, purpose and fulfilment – and in so doing, improve their wellbeing. (Layard, 2004).
Many of these characteristics – and particularly the first set of ‘narrower’ labour market aspects – are associated with higher-skilled occupations and more productive sectors. Roles in these sectors typically involve more analytical work, and the sectors employ a higher share of workers in managerial, professional and technical roles (Costa et al, 2023).
For example, the Economy 2030 Inquiry (Resolution Foundation and Centre for Economic Performance, 2023) found that wages are higher across all education groups in three key sectors linked to future growth, and that workers in these sectors have experienced faster wage growth throughout their careers (Costa et al, 2023).
Expanding employment in these sectors could therefore improve opportunities not only for highly educated workers, but also for those without higher-level qualifications.
The challenge is that these jobs are disproportionately concentrated in certain places, both nationally and within cities themselves. This means that the wider benefits of these good jobs are also spatially concentrated. Large employment centres can sustain better amenities, transport systems and public services. The clustering of skilled workers and firms can also increase innovation and knowledge-sharing, further strengthening local productivity.
This may help to explain why the highest-paying jobs are even more concentrated than graduate jobs generally, with opportunities mainly concentrated in London and a handful of other areas.
While these highest-paying jobs are spatially concentrated, the people who take those jobs often live elsewhere and commute long distances to work. This separation of work and residence allows the highest-paid to live in locations that offer other amenities – bigger houses, better schools and thriving high streets. The result is spatial concentration in good jobs and in the people who do those good jobs, but not necessarily in the same places.
Why do good jobs cluster in certain places?
The spatial disparities in the availability of good jobs reflect the self-reinforcing relationship between the demand for skills and the supply of skills – and the places where both are concentrated. Cities, in particular, offer agglomeration benefits, which can help to explain the disparities. Cities provide firms with economic advantages through shared infrastructure, access to specialist suppliers, deeper labour pools and knowledge-sharing between firms and workers.
These agglomeration benefits raise productivity. Estimates suggest that doubling population density increases productivity by around 2% (Combes and Gobillon, 2015). These benefits tend to be larger for high-skilled workers and knowledge-intensive industries, which means that high-skilled jobs have strong incentives to cluster geographically.
The shift from manufacturing towards services has concentrated many high-paying jobs in large urban economies, particularly in skill- and knowledge-intensive sectors. Technological change (Moretti, 2021) and the rise of superstar firms (Autor et al, 2020) have strengthened these patterns further by increasing the advantages of dense, highly skilled labour markets. As a result, demand for skills has become more spatially concentrated.
The supply of skills also varies across places due to differences in educational attainment and selective migration. For example, graduates are more geographically mobile than non-graduates and tend to move towards higher-wage areas with stronger labour market opportunities (Britton et al, 2021). Places with strong graduate labour markets attract more skilled workers, while weaker labour markets struggle to retain them.
The result is a widening gap in the supply of skills between places and it creates a cycle: firms looking for higher-skilled workers will locate in areas where there is availability of skilled labour. Skilled labour from other areas will relocate to where the firms are.
Who benefits from place-based growth?
Spatial disparities mean that the benefits of growth are unevenly distributed and do not automatically improve outcomes for everyone living nearby. London itself demonstrates this clearly: the city contains some of the highest-paying labour markets in Europe alongside ‘poor’ jobs, persistent deprivation and inequality in many neighbourhoods (Overman and Xu, 2024).
This suggests that policies aimed at creating more high-skilled jobs in particular cities may successfully raise productivity and average wages without substantially generating good jobs and improving other outcomes for lower-income residents already living there. Changing the economic composition of a place is not the same as improving outcomes for all the people who currently live there.
Some benefits from the concentration of good, high-paying jobs, may spill over to lower-income workers through moderately higher wages and employment rates. A higher graduate premium in nearby cities may also strengthen incentives to invest in education in smaller towns and cities. But as seen in London, there are limits to these trickle-down effects, and these benefits may come with offsetting costs, such as more expensive housing.
In short, if lower-income households are to benefit more directly from economic growth, including in their access to good jobs, complementary policies will be needed. This includes investment in education and training, childcare, health services and affordable transport to help people to access opportunities.
Beyond skills policy
The persistence of spatial inequality has often encouraged a focus on skills policy, particularly increasing educational attainment and graduate numbers in lower-productivity places. Improving skills clearly matters, but supply-side interventions alone are unlikely to rebalance the geography of opportunity. And as we’ve just discussed, the benefits of good, high-paying jobs, don’t necessarily trickle down to those less fortunate.
Research on Greater Manchester illustrates this clearly. The Economy 2030 Inquiry found that narrowing the productivity gap between London and Greater Manchester would require a substantial increase in business capital and around 180,000 additional graduates (Brandily et al, 2023).
But the annual flow of graduates through the local education system is too small relative to the existing workforce to deliver this transformation quickly (Bahl and Overman, 2026). This is compounded by the fact that Greater Manchester retains only around half of those who study at its local institutions (Swinney and Williams, 2016). This issue is likely to be exacerbated in areas with weaker educational institutions and lower retention.
The problem is not simply producing more graduates. Without corresponding growth in demand for high-skilled labour, many skilled workers will continue to move towards stronger labour markets elsewhere. This means that policies focused solely on the supply of skills are insufficient.
A more effective approach requires coordinated interventions to improve jobs, wages, housing and transport. This requires major investment, which at least initially, is likely to need to be spatially focused in a limited number of places where the self-reinforcing processes can begin.
What about policy aimed at directly improving the quality of lower-paid work itself?
Evidence suggests that fair employment policies - such as Real Living Wage commitments, fair employment charters and stronger employment protections – can have positive effects on wages for those who are in lower-paid work (What Works Centre for Local Economic Growth, 2023). Several combined authorities and devolved governments have already adopted fair employment charters that encourage employers to improve pay and working conditions.
Similarly, the recent reforms to employment rights (Department for Business and Trade, 2024), including strengthening statutory sick pay, can improve security for workers in lower-paid sectors. But as the debate around these new rights illustrates, to the extent that they impose costs on employers, there is a limit to how much they can improve employment conditions in areas that are already struggling.
There is no simple solution to reducing the concentration of good jobs in certain places. Insisting that firms improve job quality helps to address exploitative behaviours by employers, but it cannot be used suddenly to create lots of high-paying, high-quality jobs in struggling places.
Simply moving around good jobs will not work either – in part because there are strong economic forces that drive the spatial concentration of these jobs; but also because we cannot assume that this will generate higher-quality jobs that will be filled by existing residents.
Ensuring that more people can access good jobs, in more places, will depend on creating the conditions for productive firms to thrive in more places, while ensuring that the benefits of the good jobs that they generate are shared beyond those already best placed to access them.
Where can I find out more?
- Spatial disparities across labour markets: Book chapter by Henry Overman and Xiaowei Xu for the Institute of Fiscal Studies (IFS) Deaton Review of Inequalities.
- Ending stagnation: Final report of the Economy 2020 Inquiry by the Resolution Foundation and the Centre for Economic Performance (CEP) at the London School of Economics, September 2023.
- London calling? Higher education, geographical mobility and early-career earnings: IFS report by Jack Britton, Ben Waltmann, Xiaowei Xu and Laura van der Erve.
- Hive of talent: what would it take to raise skills and productivity in Greater Manchester?: CEP policy report by Aadya Bahl and Henry Overman.
- Evidence briefing: assessing the local economic impacts of fair employment policies: Evidence review by the What Works Centre for Local Economic Growth.
Who are experts on this question?
- Anne Green
- Neil Lee
- Philip McCann
- Henry Overman
- Barbara Petrongolo
- Jonathon Wadsworth
- Xiaowei Xu
