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= Labor Mobility = Labor mobility, by definition is the rate at which a worker will move to take on a new job. It can also be defined as the ease with which laborers are able to move around within an economy and between different economies. It is an important factor in the study of economics as it looks at how labor, one of the major factors of production, affects growth and production. There are several theories that have come about that say that this may be indicative of a more serious problem that could result in issues in the economy. The loss of labor market fluidity suggest the US economy is becoming less dynamic and responsive in recent decades. It is also said that productivity, wage growth, and unemployment have been negatively affected. Tyler Cowen, one of the best economists of our time, feels that we are facing a decline in dynamism, economic growth, and innovation because people are moving less. Although it is stated to be a very serious issue, economists are not able to point to one isolated reason but rather a combination of reasons. Is this decline a direct result of bad policies or a trend? It truly is an open question.

General Trend/Evidence Over Time
From 1870 to 1970 which is known as Americas "special century" of fast economic growth, vast labor mobility was matched with new inventions. During this time workers were enjoying the benefits of technological progress and were moving to make this happen. The data shows that since about 1950-1980 the percentage decline of people moving from state to state is down about 50 percent. And since 1980 the acceleration of the decline has continued. It also shows that within each state, moving from county to county is down 30 percent. Using measures such as the pace of job reallocation, the dispersion of growth rates across businesses and within business volatility, the decline in business dynamism for the U.S. private non-farm sector dates at least to the mid-1980's. Rates of gross job gains and losses in the U.S. have experienced a steady decline beginning in the late 1990's and have recently stabilized at a level only slightly higher than the trough reached during the 2007-2009 recession.

Creative Destruction
One very interesting topic centers around creative destruction. Everyone wins if you consider a dynamic market good for innovation and good for productive capacity as well as if it increases GDP, and because of better job matches it helps people be more productive. Creative destruction brings more competitive firms because weak firms are replaced with stronger ones during periods of economic crisis. It is crucial that there is always new ways of doing and thinking about things and a constant availability of new products. If people are moving less, does this affect having a dynamic labor market? Based upon research, the answer is no. Just because people are moving less does not mean critical information sharing and innovation is not happening.

Job Matching and Information Sharing
The facts are there is a positive side. One theory as to why someone would not want to move is if their job was a perfect match for him or her, which means increases in efficiencies in job matching which positive and nothing we should be concerned with. Another thought claims people are doing what they feel is best for them, they are content where they live, where they work, and they don’t see a reason to move or change. As the saying goes, why fix something that isn’t broke?

Another topic is the job market itself. For example, the quickness and ease with which we can receive information about anything has changed tremendously in the last several generations. In times before, if you wanted to move to another part of the country or even another state, you were unable to attain all the information about that location. You couldn’t find what type of weather they had, what type of specialty jobs or professions are prominent in that area. You just took a leap of faith, moved, and hoped for the best. Sometimes it worked out and sometimes it didn’t. Now a days, a plethora of information is at the touch of your fingertips and you can find out about anything, anyone, or any place. And you can make a better decision before making a move.

However others suggest there is a downside to job matching in that over the last 40 years, we have gotten increasingly worse at allowing people to move to the places where they will do their best economically. Some believe the only way to increase incomes for ordinary workers and to help realize the benefits of the technological progress we have made is that we have no choice but to get America on the move gain.

Location, Occupation, and Travel
It has also been noted that possibly researching what categories of labor are more generic in reference to geography to see if that has had an affect on the decline. Among occupations there appears to be a difference in patterns of work. Playing into the job market as well is the notion that in terms of employment opportunities the economy was more geographically diverse in previous times. What this is saying is that before certain parts of the world specialized more on certain types of jobs. However, today, you can do any job in any part of the world. So then why move? You can be any profession in any state. We have generic service sector jobs now. Since COVID-19 also comes the concept of “remote” or “telecommuting” work. Which essentially means you work at home. There is no stress of the drive to work and there are so many cost savings so why move? Also, cities are more alike now than 50 years ago.The flip side to location that economists believe is a concerning factor is they it is believed that people need to move to the regions that have become successful with the rise of certain sectors of the economy and people need to leave places that no longer support as much economic activity as they one did due to technological changes or trade competition.

Another topic is traveling in general. Today you can travel to your favorite place or a new and interesting place before deciding to make a move because it is so much safer and cheaper than past times. Some people can take multiple vacations a year so the idea of moving gets put in the back-burner. Anyone can just take a trip and see what they like most about a place and then come back home and visiting satisfies them enough so there is no need to having to move anywhere.

Retail, High Tech, Publicly Traded, and Start Up Companies
Large declines are extremely noticeable among the retail sector, younger and less educated workers. Contributing to fluidity declines is a shift to older businesses, an aging workforce, and policy developments that suppress reallocation. The shift has been away from single unit establishment firms ("Mom and Pop" firms) to large national and multi-national chains. What is considered more stable and productive is establishments in retail trade that are part of large national firms.

High tech and publicly traded firms exhibited a rise in dynamism prior to 2000.The evidence shows that in high tech, high growth young firms play an especially critical role in job creating and productivity growth. Regarding IPO's since 2000, the total numbers have fallen and for those that have entered have not had the same positive growth rate as previously. Although the overall industry decline is large, the breakdown within industries is even larger.

Young businesses are the most volatile businesses so a decline in startups implies a decline in the share of activity accounted for by young businesses. This shift away from young firms accounts for about 30 percent of the decline in dynamism. Older and much larger firms show more new establishments versus existing firms. All this states people are not willing to take on the risks associated with new entrepreneurship and that people want to work where they believe life is stable.

Employment and Wage Rate (Growth)
It is worth noting that the acceleration of the decline in dynamism coincides with a decline in U.S. economic growth whether measured by productivity or job growth. This decline has played a substantial role in the slow GDP growth we have seen since the 1970s. The largest declines in employment to population rations appears to have taken placed among demographic groups and states with the largest decline in labor market fluidity. The ability to find the best job match is made possible by job hoping along with the high likelihood of finding a job upon entry to the labor market are made possible by having a fluid labor market. New innovations does not automatically equal economic growth. However new employment and economic activity is made possible with innovation. Moving up the "job ladder" usually reflects higher-paying jobs and job switching (labor mobility) is reflective of this. Switching jobs is normally people quitting rather than losing their jobs and also known as quit rates. Quit rates happen more in expansion and less in recessions. It is shown that the worker quit rate, a proxy for the pace of job switching in the U.S. labor market, is also a strong predictor of nominal wage growth and the inflation gap. This suggests that the pace of job switching is a useful indicator for forecasting the behavior of wages and inflation.

Monetary Policy
Forging a coherent monetary policy is much harder with declining mobility. The Feds primary responsibility has been to manage inflation, keep prices stable, and reduce unemployment. With a decline in labor mobility, unemployment will increase as the Fed tries to keep inflation from rising in tight markets. Federal safety-net spending is less efficacious as people in worse job markets require more of it. In order to create lots of new economic activity and use the technologies we have more effectively we must have polices aimed at unclogging our rigid and unresponsive national labor market.

Home Ownership
Most people who own a home have almost all their wealth and savings in their home. And this makes the decision to move a very difficult and challenging one. First and foremost to move is expensive, especially if you have to put money into your home to sell and then have money to purchase a new home where you move because most people who own will want to continue to own versus renting. Also you may lose money selling your home if you can’t get what you owe. Home ownership is a very good thing as it provides stability and healthy communities.

Land Use Regulations and Occupational Licensing
Occupational licensing regimes have kept people out of the most crucial job markets along with entry limits like zoning regions and richer cities. In the last 50 years the number of jobs requiring occupational licenses has increased from 5 percent to 23 percent. Exit limits among different jurisdictions are not easily transferable which creates less opportunities for people to move or leave economically struggling places. There are also governmental structures and physical plants that do not coincide a cities current economic situation which is known as shrinkage limits. The result is a misallocation of labor and capital and lower output levels. 13.5 percent of GDP is said to be the lost output coming from the hottest labor markets because workers are not moving to them. Housing construction at the regional level about the 1970's and 1980's began to feel the real effect of land-use restrictions during this time. Coincidentally this was the same period in which a slow down of economic growth began.

Condition of Poverty
A lot has also been said regarding poverty. If you are poor now in a declining social economy and you are being supported by a social safety net, such as benefits like welfare programs, everything that supports you is in one place, so what would cause you to move? It benefits you to stay put. Failing to leave declining places and not moving to economically vital regions are felt most among the poor and less skilled. Higher costs are inevitable in rich markets and when the poorer workers live in these areas federal aid has to be high as well which means in order to pay for these higher benefits we have to raise taxes which causes output to suffer.

Should We Be Concerned?
Is there a downside to any of this or losers? One set of data shows there isn’t because at the end of the day, we are all doing and making the decisions that are best for us. If I want to move I can and if I never want to move, I don’t have to. And as previously shown, there are positive side or winners to this. Does labor market mobility have an interest or characteristic for a public good? Let’s say, if I stay put and people around me are constantly moving, does that help me? Possibly yes. People don’t move because there is no benefit for them. If new policies or changes in current policies can alleviate the decline then it makes absolute sense that anything and everything is considered when looking for a solution. To make things better a policy should be a practical prescription for this. Economics 101 states nothing is free and is full of trade offs. It is costing you more to move and benefiting you less to move and so people are moving less.

Another set of data states the decline of labor mobility is a seriously concerning topic and problem for economists. Such unemployment constitutes lost capacity - people who be working but are not - and potentially lost growth, as "hysteresis,"a loss of skills from the long-term unemployed sets in. "Agglomeration economies" and higher wages can only come about by being near the right set of workers which also increases the possibility of earning more wages and there is lost growth as workers don't learn from workers nearby.

All in all, labor mobility is a topic that needs a lot more research, time, and focus. Either way you look at it, it has had a huge effect on our economy and will continue to do so.