Wednesday, December 12, 2012

Why is American Mobility Declining?

Timothy Taylor discusses new data from the US Census that describes the decline in mobility across regions in the United States. It is evident that Americans are less likely to move to new metropolitan areas than at any point since WWII. There are strong economic implications associated with this as households staying put may lose out on employment, wage and productivity opportunities that can only be realized by moving. Here are Taylor's thoughts on why people are moving less (he is citing a paper by Molloy, Smith and Wozniak): 
Molloy, Smith, and Wozniak consider possible long-term explanations for a declining rate of mobility, like the possibility that an aging population less likely to move. As they put it: "However, these differences across groups are not useful in explaining why migration has fallen in recent decades. The decrease in migration does not seem to be driven by demographic or socioeconomic trends, because migration rates have fallen for nearly every subpopulation ..."

They freely admit that there is not yet an answer in the economic research as to why geographic mobility has been declining, but they offer some hypotheses.
For example, one argument is that migration was high in the post WWII years as part of a significant population shift to the South, a shift which has been diminishing every since. But this factor doesn't seem to be significant enough, given the observed data on interregional migration.
Another hypothesis is that there are more two-earner families, and so when one person loses a job the household may be more reluctant to relocate. But this argument faces the problem that "the percentage of households with two earners has been quite stable over the last 30 years."
Yet another possibility "is that technological advances have allowed for an expansion of telecommuting and flexible work schedules, reducing the need for workers to move for a job." However, the data on telecommuting doesn't show that it is a large enough factor to explain the decline in mobility.

And yet another possibility "is that locations have become less specialized in the types of goods and services produced, making the types of available jobs more similar across space. ... A related idea is that the distribution of amenities has become more homogeneous across locations, making residence in any particular city less attractive." This explanation may have some truth in it, but it's proven difficult to gather data that would allow it to be tested in any definitive way.
Finally, it may just be that many Americans are shifting their preferences away from being willing to move. Molloy, Smith and Wozniak present evidence that "the secular decline in geographic mobility appears to be specific to the U.S. experience, since internal mobility has neither fallen in most other European economies nor in Canada—with the United Kingdom as a notable exception."
Whatever the reason behind the decline in geographic mobility, there are implications for the economy if the workforce becomes less flexible and less willing to move from areas where the economy is weaker to where it is stronger. In addition, lower mobility has broad implications for what its like to live in America. People find it harder to envision their lives as involving a big move. Social networks are reshaped. When mobility drops, we become a country where you are less likely to end up living and working with people from other states, other counties, or even other parts of your own county.
I largely agree with these thoughts, and certainly agree that declining national mobility is problematic and is likely a causal factor in the current sluggish economy. The metropolitan regions that will thrive in the future are the ones that will attract immigrants, whether those immigrants are from around the country or around the world.

Declining mobility has been recognized in scholarship as a problem, and there are creative policy interventions proposed. One that I like is from Jens Ludwig and Steven Raphael at the Brookings Institute's Hamilton Project. They argue for a mobility bank to help pay for residential moves. Here is a link to their paper, and here is their abstract:
This paper proposes the creation of a “mobility bank” at a government cost of less than $1 billion per year to help finance the residential moves of U.S. workers relocating either to take offered jobs or to search for work, and to help them learn more about the employment options available in other parts of the country. Whereas those with college degrees and savings are much more likely to move in response to job loss and to improve their job market outcomes, those with less skills and no savings may have difficulty financing such transitions. The government should target mobility bank loans toward displaced, unemployed, and underemployed people in depressed areas of the country and should help to insure people against job-outcome uncertainty by making repayment terms contingent on the borrower’s post-move employment and income. This proposal extends government support for work-related moves that already are included in the U.S. tax code but that primarily benefit higher-income households. Calculations suggest that the benefits compare favorably with the costs from alternative federal efforts. Perhaps more importantly, our proposal helps address a persistent market failure that limits the ability of low-income families to borrow against future earnings to “invest” in job-promoting residential moves.
If it proves true that residential mobility is crucial to economic performance, then we need to consider policies that encourage mobility. What is described nationally by the Census and potentially solved by a mobility bank is an extension of the jobs-housing matching problems that planners deal with all the time.
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