Stuck! The Law and Economics of Residential Stagnation

Abstract

America has become a nation of homebodies. Rates of interstate mobility, by most estimates, have been falling for decades. Interstate mobility rates are particularly low and stagnant among disadvantaged groups -despite a growing connection between mobility and economic opportunity. Perhaps most importantly, mobility is declining in regions where it is needed most. Americans are not leaving places hit by economic crises, resulting in unemployment rates and low wages that linger in these areas for decades. And people are not moving to rich regions where the highest wages are available. This Article advances two central claims. First, declining interstate mobility rates create problems for federal macroeconomic policymaking. Low rates of interstate mobility make it harder for the Federal Reserve to meet both sides of its "dual mandate": ensuring both stable prices and maximum employment. Low interstate mobility rates also impair the efficacy and affordability of federal safety net programs that rely on state and local participation, and reduce wealth and growth by inhibiting agglomeration economies. While determining an optimal rate of interstate mobility is difficult, policies that unnaturally inhibit interstate moves worsen national economic problems.