No. 1489 - Should I stay or should I go? The response of labor migration to economic shocks
This work examines the three channels through which employment can adjust to an exogenous variation in labor demand: labor participation, unemployment, and labor mobility. The empirical analysis, which focuses on the United States, uses established approaches from the literature to identify exogenous variations in labor demand and employs data from several sources covering the period from 1946 to 2021.
The results show that labor mobility is a crucial mechanism for labor market adjustment: about 60 per cent of the growth in employment five years after an increase in labor demand is due to the arrival of new workers from other regions of the country. Although the dynamics of mobility and employment in response to labor demand shocks have varied over time, the relative importance of mobility has not changed since the 1940s.
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17 June 2025
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