The rural pay penalty: youth earnings and social capital in Britain

Abstract

Young people in rural areas are under-researched, and there is a particular paucity of studies on rural youth in the labour market. This paper addresses that dearth. I pose the research question: how does rural location affect the earnings of young people in full-time employment in Britain? I consider the background of rural disadvantage, and its specific effects on young people and outline the relevance of social capital to this topic, identifying norms and networks as the two constituent elements of the concept. Using data from the British Household Panel Survey Wave 17 (2007/8), I find that rural youth are paid less than urban counterparts. When coupled with higher living costs, this amounts to a double disadvantage for rural youth. Concerning social capital, I find that norms – in terms of trust in individuals, community and institutions – exert a significant effect on net pay. Conversely, despite prior research positing the importance of informal contacts for rural jobseekers, networks do not exhibit any significant effect on wages. This corroborates accounts of social capital as a protean concept, illustrating how one facet alters the likelihood of finding work, while the other facet determines outcomes once in employment.

Keywords:

• rural pay penalty
• double disadvantage
• social capital
• norms
• networks