What Is Geographical Labor Mobility?

What Is Geographical Labor Mobility?

Let me explain geographical labor mobility to you directly: it's a measure of how easily workers can relocate within a nation or region to find jobs that match their skills. When you have greater labor mobility in an economy, you see higher productivity overall.

Key Takeaways

You should know that workers' mobility depends on factors like transportation options, standards of living, and government policies. In the United States, the rate of geographic labor mobility has been dropping steadily since the 1980s. Remember, greater mobility links directly to higher productivity and economic output.

Understanding Geographical Labor Mobility

Geographic labor mobility shows you the relative ease or difficulty workers face when they need to relocate for better jobs. Factors determining this include the ease of movement and migration, plus economic incentives to relocate. Physical, geographic, and political barriers can make moving tougher.

The size of a region and its job opportunities play a part in geographic labor mobility. On a personal level, things like your family situation, housing availability, local infrastructure, and educational resources affect it. An economy's level of trade also influences workforce mobility—for instance, more domestic and international trade means opening corporate offices in various locations, which boosts job opportunities there.

What Is Occupational Labor Mobility?

Occupational labor mobility is about how easily workers can switch jobs or professions, regardless of location. Unlike geographical mobility, it doesn't require you to relocate.

Other Elements That Affect Geographic Mobility

Several other factors make geographic labor mobility more or less viable. The overall education level in a population influences workforce mobility—higher education usually means greater ability to move for employment.

Your personal and cultural attitudes drive labor mobility too. If you're strongly attached to a place, you'll need significant motivation to relocate. Industrialization is another key determinant; highly industrialized economies offer more blue-collar jobs, increasing overall labor mobility by helping workers move from rural areas to cities with more opportunities.

Government policies have a heavy influence on geographic labor mobility. For example, the European Union works to increase it by helping qualified workers find jobs in countries where their skills are needed. If a government aims to boost mobility, it can support transportation, raise living standards, and implement policies that aid movement within the economy.

Important Note on Non-Compete Clauses

Be aware that non-compete clauses used by businesses can block senior employees from starting new ventures after leaving a company. In April 2024, the Federal Trade Commission issued a rule banning most non-compete clauses in employment contracts, set to take effect in September 2024, though it's facing legal challenges.

Pros and Cons of Geographic Labor Mobility

Geographic labor mobility brings benefits to a nation's economy, mainly through better labor allocation and higher productivity. An economic study in The Yale Law Journal notes that it makes managing macroeconomic stability easier, and local barriers can weaken macroeconomic policy effectiveness.

On the downside, mobility can lead to the breakdown of local communities and even the loss of indigenous cultures as people migrate for opportunities and settle in unfamiliar areas. This erodes social capital in both the places workers leave and the new ones they enter. It's also a direct cause of brain drain from developing regions and nations.

Geographic Labor Mobility in the U.S.

The U.S. history offers a clear case study of geographic labor mobility during economic development. When the country expanded westward and new industries grew, mobility was at its highest, with migrants and American-born workers heading to promising areas.

But since the 1980s, the rate of moving has declined consistently. U.S. Census data shows interstate movement fell by nearly half since 1989, and inter-county mobility dropped by almost a third. Even during the coronavirus pandemic, it continued downward, with only 8.4% of people in a different residence in 2021, compared to 9.3% in 2020.

Why Is Labor Mobility Important?

Increased labor mobility is generally positive for the economy. It leads to higher productivity, more satisfied employees, lower unemployment, and rising GDP.

Why Is Cross-Border Labor Mobility Controversial?

Encouraging geographic mobility across borders often sparks controversy. Opponents say migrant workers take jobs by accepting lower wages, displacing citizens. In extreme cases, it causes overpopulation, strains public services, raises living costs, and fuels social unrest. Others point out that migrants fill low-paying, low-skilled jobs that few locals want, and a growing population typically brings economic growth and prosperity.

The Bottom Line

Geographic labor mobility is one of many factors economists use to assess a nation's workforce strength. Generally, workers who can freely relocate for new opportunities are more productive. Businesses that recruit nationwide rather than locally are more likely to succeed.