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July 25, 2016 Reading Time: 2 minutes

One interesting feature of the U.S. labor market over the last few decades is the decline in geographic migration, a topic I discussed in AIER’s March Research Brief. This is occurring during a period where other types of labor-market mobility (such as job changes) are also decreasing. A natural supposition is that these trends are linked, and many observers believe that this lower mobility is a sign of a less flexible and dynamic U.S. economy, and thus, a big problem.

Other researchers, including myself, find the evidence less clear, and are open to more optimistic explanations. If, for instance, information technology has made job matching easier, people may be making fewer moves because today’s workers can be quicker to find a good fit for their skills and preferences without as much hopping between jobs and cities.

A new paper, profiled last week in the The Wall Street Journal, comes down on the pessimistic side of the debate – but with a twist. Many people who are concerned about lower mobility blame changes in labor supply: occupational licensing, housing restrictions, or even just the aging population make it tougher for people to move to the place or job that would be best. The authors, however, argue that lower mobility since 2000 is instead a function of lessening labor demand. Maybe there just aren’t enough new jobs for people to find, and for which to move around.

I am interested to see close attention paid to the demand side, since most economists have focused on supply-based explanations – in fact, I mentioned exactly this point this week in my migration talk for the AIER Summer Speaker Series. However, I am skeptical this is truly the best explanation for mobility declines – especially for lower geographic migration.

Internal migration has been declining steadily since at least 1990, a decade before the recessions to which the authors point as primary contributors to lower mobility. This has held through periods of wage growth as well as stagnation.

In the WSJ article, Notre Dame economist Abigail Wozniak, a prominent researcher on this topic, makes a similar cautionary point. Still, while I may not agree with their conclusions, I found this an interesting study on an unanswered question that is very important to our economy.

Patrick Coate delivered a talk on this topic last Tuesday at our Great Barrington, Massachusetts headquarters. The video can be seen above, or at this link.

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Patrick Coate, PhD

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