In the 20th century, one of the standout features of the U.S. workforce was Americans’ willingness to chase economic opportunity to new cities, regions, and states. Geographic mobility makes for a more flexible workforce, and that flexibility can be a boon for an economy, with workers going where they’re needed. But in recent years, the U.S. labor force has undergone a substantial change, becoming less likely to move. In 2016, 1.5 percent of Americans moved out of the state they were living in. Between 1950 and 1990, that percentage was more than twice as large.
This raises a host of interesting economic questions. Is geographic mobility related to social or economic mobility? Do people who move get better jobs? Better pay? If so, for whom?
Since early career success is a major factor in determining lifetime earnings, these considerations, whether to move and where, are especially pressing for young Americans who came of working age during or immediately after the Great Recession. For this group, small salary changes can make a big difference down the road, and the positive effects of securing a good job can accumulate over decades, as the effects of losing a job can too.
A new study sheds light on the importance of location, looking at whether a worker’s proximity to his or her parents affects long-term earnings following the loss of a job. To study this, the researchers compared the earnings of people who lost their jobs with parents nearby versus those whose parents lived farther away. The researchers looked at data collected from roughly 35,000 people from the Panel Study of Income Dynamics, the longest running longitudinal household survey in the world, between 1968 and 2013. Parental proximity certainly matters for something: For example, it was found that people who live outside their parents’ neighborhood tend to, on average, be younger, be more educated, and earn significantly more than those who stayed in their parents’ orbits.