Nick Schulz Interviews Enrico Moretti

by Reihan Salam

At The American, Nick Schulz draws out the central insights of Enrico Moretti’s The New Geography of Jobs in a wide-ranging interview:

College graduates have the highest mobility of all, workers with a community college education are less mobile, high school graduates are even less, and high school dropouts come at the bottom of the list. (In total, almost half of college graduates move out of their birth states by age 30. Only 27 percent of high school graduates and 17 percent of high school dropouts do so.)

This fact matters enormously for inequality, as the relative lack of mobility of less educated Americans has large economic costs. Differences in geographical mobility, coupled with increasing polarization among American cities, exacerbate income differences across education groups. Indeed, if the less educated people were more able and willing to move to cities with better job opportunities, the gap between college graduates and high school graduates would shrink.

Government policies are part of the problem. The unemployment insurance system does not provide any incentive for unemployed workers to look for jobs in places with better labor markets. If anything, it discourages mobility from high-unemployment areas to low-unemployment ones, because it does not compensate for the difference in cost of living. If you are living off an unemployment check in Flint, you do not have a lot of incentives to move to San Francisco to look for a new job, because your housing expenses would triple, but your check would still reflect the cost of living in Flint. The unemployment insurance system should be adjusted to reflect the vast and growing differences in economic fortunes among American cities. Unemployed people living in areas with above-average unemployment rates should receive part of their unemployment insurance check in the form of a mobility voucher that would cover some of the costs of moving to a different area. In other words, instead of encouraging out-of-work residents to remain in Flint, the federal government could help them relocate to Texas (or wherever they might choose to go) with financial support that covers a portion of their moving expenses. This would help those who would like to move but are stuck because they lack cash.

America’s persistent poverty problem is essentially a problem of geographical and social isolation. The social isolation problem is, for obvious reasons, thornier than the geographical isolation problem. And so there is a strong case for facilitating the migration of less-skilled workers to high-productivity regions, whether through mobility vouchers, which might be a hard policy to implement, or more prosaically through a sustained campaign against the exclusionary local land use regulations that are so common high-productivity regions, as Virginia Postrel and Ryan Avent have observed, among others.