Politics & Policies

US – Labor markets became much less fluid in recent decades says Cato Institute

As measured by flows of jobs and workers across employers, U.S. labor markets became muchCATO less fluid in recent decades. We document a large, broad-based decline in these labor market flows, drawing on multiple data sources. An aging workforce and a secular shift away from younger and smaller employers can partly account for the long-term decline in labor market fluidity, but these forces are not the main story. Instead, we find large declines in worker reallocation across employers within groups defined by gender and age or gender and education. Likewise, we document large declines in job reallocation across employers within groups defined by industry, employer size, and employer age…

Many factors may have contributed to reduced labor market fluidity in the United States. We think restrictions on occupational labor supply, wrongful discharge and anti-discrimination laws, and the preferential tax treatment of employer-provided health insurance are among the policy factors that played a role in reducing labor market fluidity. Regardless of other benefits (and costs) associated with these policy factors, their role in suppressing labor market fluidity can lead to negative effects on productivity, welfare, and employment.

Chosen excerpts by Job Market Monitor. Read the whole story at Labor Market Fluidity and Economic Performance | Cato Institute.

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