This creeping rigidity in the labor market handcuffs our competitiveness. Economist Andrew Oswald has found that in the U.S. and Europe, places with higher homeownership rates also suffered from higher unemployment. During down times, homeownership can lock people into blighted locations and force them into work, if they can find it, that’s a poor match for their abilities.
Policies that help to create captive labor markets are bad for the national (and global) economy. Trying to keep young adult talent from leaving a region is similarly misguided. So is the current design of the H-1B visa program. We should be promoting geographic mobility instead of trying to stifle it.
Enter the World Bank with a groundbreaking report advocating for increased migration:
The new [World Development Report] challenges the assumption that economic activities must be spread geographically to benefit the world’s most poor and vulnerable. Trying to spread out economic activity can hinder growth and does little to fight poverty. For rapid, shared growth, governments must promote economic integration which, at its core, is about the mobility of people, products, and ideas.
Trying to plug the brain drain is harmful to both individuals and, eventually, the entire community. We should be helping our children, if we really want them to prosper, to become more geographically mobile. The real policy challenge is figuring out how to generate a local return on out-migration. Few politicians seem to grasp this, instead opting for anachronistic workforce development that feeds local enterprise with undervalued talent. The lack of vision is disappointing.