Economic Drivers I Had Not Considered Before

Geographic mobility costs are a drag on the economy, because they slow and/or truncate relocation of labor to shifting areas of demand (a good example is the fact that North Dakota currently can't get enough workers because people can't/won't move there to take advantage of the opportunities.

Apparently, there are economists who make the argument that one reason for the post-WWII boom is that the war increased mobility for a variety of reasons, not the least of which was the forced extrication of young men from their homes via the draft.  Apparently Hurricane Katrina may have had the same effect, blasting people out of the moribund New Orleans economy and forcing them to move to more dynamic areas.

This is probably true, but also one of those areas where economic analysis falls short of total well-being analysis (for lack of a better term).  I know folks from New Orleans and they often seem to be deeply tied to the New Orleans culture and miss it when they have moved away.   Many move back.  So just because someone is better off economically with a job in Houston does not necessarily mean they consider themselves better off.


  1. Michael Stack:

    I had a similar thought but in fairness, in the reporting I've seen on this (especially around Katrina and New Orleans) I haven't seen anyone suggesting that folks who were displaced are actually better off - I've only seen suggestions that their incomes improved.

  2. jimcraq:

    I've always felt that just because someone is better off economically does not necessarily mean they consider themselves better off. Using wealth or income as the sole indicator of well-being is pretty silly. (I leave it to others to decide what to use.)

  3. Mike Powers:

    If my house loan is more than my house is worth, then I'm stuck where I am no matter how much I'd like to move to improve my circumstances.

    If a hurricane blows my house down and the government pays off the loan, then I'm able to move again.

  4. wreckinball:

    Anohyer reason places like ND have a hard time attracting workers is that for middle to lower middle income jobs there is no incentive to move. Endless "benefits" allows someone to stay permanently unemployed and just stay where they are. As long as you accept the standard of living those benefits provide which is not all that bad.

  5. Elam Bend:

    WWI was also a big mobility maker. A lot of those boys just didn't go back to those farms. My own home county dropped from about 20,000 people to around 6,000 in just a decade and never recovered. Interestingly enough, the size of the towns never really changed. It was all rural population. (If you're wondering, this change came before the dust bowl).

  6. EricP:

    I'm Canadian and I've always wondered why the federal doesn't cover relocation expenses for the unemployed to help them move where the jobs are if they are willing to work. I'm not a big fan of yet another government program but it seems more productive than endlessly paying them to not work in areas where there are no jobs.

  7. awp:

    This is a big part of urban economics. Theoretically, we assume total well-being is equivalent across cities, at equilibrium*. Thus lower wages relative to costs in one city shows that people value the intangibles of that city at an amount to offset the lower wages relative to costs.

    *Thus static analysis that shows Houston, North Dakota, and Detroit having high wages relative to costs would imply that these places are hell holes. Except in the real world we are not at equilibrium, and dynamically we know this is not true for Houston because so many people are moving to Houston. The current sum of high wages and "amenities" relative to costs is attracting people from other cities. Dynamically we know that people really do not value the "amenities" in North Dakota because despite the high wages they are not attracting very many people.

  8. bigmaq1980:

    The areas in ND where there is high demand for labor are also place where there is high demand for the basics of living (food, space, etc) as well as for extended needs (e.g. schools, restaurants, hospitals).

    These are "growing pains", which come with the relatively sparse population (vs for a large urban center).

    So, comparing to Houston is a bit of apples to oranges.

  9. bigmaq1980:

    If they do so in Canada, it comes at a much higher cost there (per capita) than the impact of not doing so in the US.

  10. Stan Forron:

    Likely because well-off areas wouldn't appreciate the Federal Government dumping hundreds or thousands of urban poor at their doorstep. It'd be better for the transportees in the long run, but a major drain on the receiving area's social spending.

    A lot of high-cost-of-living places (Hawaii is a big one) offer free plane tickets for the homeless to go away (to live with a relative in another state, perhaps).

  11. awp:

    Most of the reports I have seen still give North Dakota high marks on income/costs.

  12. EricP:

    They don't do it in Canada directly although you can get a tax break on expenses incurred to move for a job (only applies if you get a job).

    The problem of course is that someone who has been unemployed for a while and collecting UI and then welfare is that they lack the upfront-cash to relocated so the tax break doesn't help them.

    I had a friend who was in that situation. I lent him the money and he's now gainfully employed and no longer collecting government hand-outs. Not everyone has a friend who can lend them thousands of dollars to start over.

  13. EricP:

    You are probably right that that would be the end-result since I doubt any federal program would actually enforce the caveat "if they are willing to work".