Labor mobility
Thursday, November 18th, 2010If labor was perfectly mobile and suddenly there were massive dislocations requiring workers to relocate, you’d expect an uptick in the number of workers moving, right? A corollary is that if you do not see an up-tick in the number of workers moving, then either there was no massive dislocations or there is not perfectly mobility. Take the second case: with imperfect immobility workers would like to take jobs in other places, but they can’t. This looks like sticky wages. Sticky wages make aggregate demand effects important. These data suggesting labor mobility did not increase in the last recession, then, are consistent with both structural and cyclical problems in the labor market.
