July 11, 2012
STARTING WHERE YOU WANT TO FINISH:
Move over : Falling labour mobility in America may reflect a more efficient market (The Economist, Jul 7th 2012)
Reduced mobility largely reflects two shifts in the nature of economic activity.The first is that the mix of jobs offered in different parts of America has become more uniform. The authors compute an index of occupational segregation, which compares the composition of employment in individual places with the national profile. Over time, their figures show, employment in individual markets has come to resemble more closely that in the nation as a whole.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.Yet a more uniform job distribution alone cannot account for falling mobility. As Messrs Kaplan and Schulhofer-Wohl point out, mobility has fallen for manufacturers, where jobs are more dispersed, as well as for service-sector workers. What is more, if workers know that they can find jobs they want in different places, they may become more willing to move for other reasons--to be by the coast, for example, or to savour a particular music scene. Yet survey data reveal that moves for these other reasons have not risen. The authors suggest another force is also reducing migration: the plummeting cost of information.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.
Posted by Orrin Judd at July 11, 2012 5:41 AM
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