Michael Strain’s new jobs agenda and mobility payments
I have been meaning to cover this topic, here is an overview from Reihan. There is one brief version from Strain here. He has many valuable ideas, and the one which has caught my attention is this:
Offering relocation vouchers to the long-term unemployed in high-unemployment areas…
There are some pretty good jobs around, including in parts of Texas and North Dakota. The point is not that these jobs/regions could absorb all of the current unemployed, but rather that we can learn something about the current unemployed (at the margin of course) but noting that these jobs remain unfilled.
First, I would like to know what the unemployment (participation?) rate would be today if American labor had a mobility rate closer to that of the early to mid 1980s.
Second, here is a study (pdf) of a 1976 federal jobs relocation subsidy program. The conclusion is vaguely positive, but not firm. Here is a study (pdf) of relocation assistance in Germany, mostly positive. Here is a good discussion of U.S. trade adjustment relocation assistance with lots of numbers (pdf), it tries to be positive but my reading of the content suggests lukewarm results. Here is a Brookings proposal (pdf).
Some states offer relocation assistance, for Wisconsin you need to have a job elsewhere already lined up. Perhaps that restriction should be eased, but in any case I do not hear of massive success stories from current relocation programs, even if they are net positives. Here is a CRS overview of federal programs for unemployed workers, some of which boost mobility. Here are some FAQs on trade adjustment relocation assistance.
Third, I wonder if a subsidy is the right response here. After all, there is already a potential benefit from moving, assuming the subsidy idea makes sense in the first place. Yet, if we are to accept many of the more pessimistic behavioral accounts of unemployment, a lassitude and feeling of hopelessness sets in. Positive incentives may not suffice, at least not in the absence of a behavioral spur to change the process of decision-making and induce some more pro-active choices.
By the way, there are some bureaucratic complications — not daunting ones but costs nonetheless — if you switch states while looking for a job and collecting UI. Perhaps these paperwork requirements could be eased and turned into a simple one-click process.
What if it turned out that a tax or penalty for unemployed non-movers was overall more effective? Would or should we be willing to support such an idea? Of course it would inevitably fall on some innocent victims as well, people who should not move or people who cannot move, perhaps for reasons of family ties. How about a tax for staying combined with a benefit for leaving?
How about if the tax is based on a Big Data model to limit the number of unjust losers? That would mean more frequent taxes for Appalachian stayers, and less frequent taxes for individuals with elderly dependents on their tax returns.
If the tax were a big net plus for the current unemployed, but hit some innocent losers, and sent the wrong mood affiliation, would we still support it? Should we still support it? What if the tax took the form of poor public services? Does it need to be more aggressive than that?
Should we even be asking these questions?