By Samuel Hammond, Niskanen Center
In simple economic models, workers disrupted by trade or automation are instantly reallocated from declining industries to ones on the rise. Yet that is rarely if ever the case in the real world. Labor markets are highly complex institutions, riddled with frictions created by geography, social networks, discrimination, and regulations that vary from place to place.
In a world where nothing ever changes, this wouldn’t be a big problem. Yet in a dynamic, growing economy, change is the rule, particularly with increased foreign trade and major breakthroughs in AI and robotics on the horizon. This demands that the United States finally get around to constructing a truly national labor market — one with robust employment, training, and relocation supports that follow workers wherever they go.