Thursday, July 05, 2012

Mystery Of Declining Geographic Mobility

US geographic mobility is declining. Why? Ryan Avent (Free Exchange) summarizes the findings of a Federal Reserve Bank of Minneapolis report:

This homogenisation reflects the rising importance of “non-tradable” work. As the name suggests, non-tradable goods and services are not traded across long distances. Californian dentists tend not to clean Floridian teeth; every city has its own dentists. Cars, by contrast, are tradable, so not every state has its own car plant. Recent research by Michael Spence and Sandile Hlatshwayo of New York University’s Stern School of Business found that 98% of employment growth between 1990 and 2008 occurred in non-tradable industries. Education and health-care jobs now account for 15% of employment, up from less than 10% in 1990. With more of the country’s employment mix present in each state, it is less necessary to move to find work.

I buy that explanation. It makes sense and dovetails with Enrico Moretti's understanding of the US Innovation Economy. The second rationale doesn't pass the sniff test:

Young workers in particular used to have to move to gather information: to see whether they could stand a Boston winter, say, or cared enough about the Californian climate to pay Californian rents. In recent decades, however, it has become much easier to learn about places without moving house. Deregulated airlines and innovative online-travel services have slashed travel costs, allowing people to visit and assess different markets without moving. The web makes it vastly easier to study every aspect of a potential new home, from the quality of its apartment stock to the surliness of its baristas, all without leaving home. Falling mobility isn’t simply caused by labour-market homogenisation, the authors argue, but also by greater efficiency. People are able to find the right job in the ideal city in fewer hops than before.

Better information should catalyze greater geographic mobility, not gum it up. The implication is that there is less failed migration. Another possibility is that your typical failed migrant is, for some reason, less likely to leave in the first place. Regardless, more efficient migration doesn't fit well within general theories of migration. Part of the mystery endures.


Matthew Hall said...

Surely it's technology. Workers can work from more places and do so. The work moves instead of the people.

KT said...

I tend to agree. I also find the growth in "non-tradeable" work easy to question, esp. in the time span given.

Technology might make it less likely for people to have to move for a job, but it makes it far easier for employees to move jobs.

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