(or if you an entrepreneur looking for an opportunity — look for industries dominated by old white males)
Random saturday thoughtlet. Do demographic imbalances signal inefficient markets ?
For this post lets define a demographic imbalance as when the make up of an industry doesn’t mirror the Labour force.
To elaborate funeral merchants in the UK are usually white British. Singaporean taxi drivers are ethnically Chinese and Malay (but not Tamil 15% of the population). Builders in Dubai are Indian, and government workers are Arab. The jobs where immigration penetrates fast — e.g. cleaners in the US; shop owners in the UK; restaurants and delivery people etc. — are ones where the regulated barriers to entry are low, and the labour market is supply constrained (needs more people).
Areas where the demographics of the industry owners — don’t represent the demographics of the “incremental population” — i.e. the new population entering the market- are the parts of the system with the higher barriers to entry. Interestingly I think this is true for skilled as well as unskilled jobs and there are things you can do to break this
For example why are there many asian doctors in the London — clearly its 9 years of training — a pretty high barrier to entry ? When there was a shortfall in doctors in the UK — the UK took steps to recruit medical staff from Europe (and the former colonies !) partly recognising qualifications received overseas. Clearly the state is pretty efficient at responding to consumer demands — probably more efficient than industry — which may suffer from regulatory capture by the incumbents — to create inefficient markets and poor consumer outcomes.
To go a bit further the industries that have stagnated are where the demographic make up represents the demographics of 40–50 years ago are benefiting from some “unfair” advantage in a barrier to entry. For consumers — this probably impacts service levels — e.g. wait times, or costs / prices; but the incumbents — are able to lobby around this. London cab drivers and Funeral directors are testament to this.
I wonder if you could create a simple measure by industry of the demographic mix of workers in that industry — and use that as a leading indicator to see where there is a lack of competition / high barrier to entry.
Note think this is true for big industries too — e.g. banking. And obviously true for gender diversity too — industries / companies with a non-representative gender mix have “hidden” barriers to entry — “the glass ceiling”. Females entering the workforce have been the biggest source of “incremental labour” over the last 100 years.
Obviously diversity is good for lots of reasons — but the point of this post is that a lack of diversity could be an indicator of inefficient market — and dismantling the barrier will create an opportunity (lower cost; better serviced) products and better outcomes for consumers
Thinking about this a bit more — probably the most useful audience for such a list is entrepreneurs looking for an industry to disrupt rather than governments or regulators.
Look for an industry dominated by old white males
Note this is a very UK centric view curious on how this plays out in other markets
