The modern world moves fast, as the cliché goes, but in the U.S. today, people move less frequently than their parents did a generation ago. The decline in mobility is such more than an academic curiosity. Economists widely view labor mobility as the principal mechanism by which regions adjust to local economic shocks. If local industries fall on hard times, workers can leave; in places where labor demand is high, new residents flow in. The decline has therefore generated concern that the economy is less adaptable to local shocks, ultimately resulting in labor misallocation, unrealized output, and lower productivity.
This article appeared in the First Quarter 2020 edition of Economic Insights. Download and read the full issue.