What Caused the Decline in Interstate Migration in the United States?

Source: Federal Reserve Bank of New York, Liberty Street Economics blog, October 17, 2016

Geographic mobility is thought to be important both for economic mobility and for the efficiency of a labor market in allocating the right people to the right jobs. Accordingly, the willingness of the U.S. workforce to move is a factor behind the greater dynamism of the U.S. labor market compared to Europe. While Europeans tend to be more reluctant to move to distant places within their respective countries, the idea of moving across state borders for a job has been woven into the fabric of the American Dream. However, the image of the United States as a mobile nation has changed substantially over recent decades. This post investigates the role that demographic shifts—in particular, the nation’s aging population—have played in the recent decline in interstate migration.

About 3 percent of the working-age population—defined as people from ages 25 to 59—moved to a different state in a given year during the 1980s, as shown in the chart below (see the red line). Starting in the 1990s, this rate declined steadily, falling below 1.5 percent by 2010. While part of the decline can be attributed to the Great Recession, the bulk of this phenomenon took place over the course of several decades and is unlikely to be related to the business cycle.