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Shocked Into Moving

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Shocked Into Moving

The dislocation caused by economic reversals can lead people to seek opportunity elsewhere. February 18, 2022
Economy, finance, and budgets
Covid-19

The fallout from Covid-19—the expansion of remote work, rising crime, and the introduction of lockdowns—has led many people to pack up and move. But mobility isn’t always a bad thing; it can be just another way that people vote with their feet.

The last time a shock led to this degree of mobility was the 2008 financial crisis. In a recently published paper in the Journal of Economic Geography, Michael Ohlrogge and I create a new data set that examines geographic mobility throughout the crisis among foreclosed homeowners. We compare where an individual was located originally at the time of foreclosure to where that individual moved following foreclosure. We find that people moved, on average, to census tracts and counties with better economic indicators—higher income and lower unemployment, among other factors.

That might sound counterintuitive. Clearly, a foreclosure is a bad outcome. So how could people end up moving to more competitive areas after foreclosure? Some of the answer depends on how we think about the origins of the 2000s housing bubble: whether it was driven by poor federal incentives that encouraged people into homes who weren’t able to sustain them, by restrictive zoning policies, or by other factors. But another factor is relevant: many of the movers were people who ended up renting in the new location, rather than owning in their original location.

Not everyone gained the same amount from their moves. In particular, those who were in areas with dynamic labor markets in neighboring counties had much better opportunities. That’s not surprising: better labor market options give people more bargaining power, allowing them to have more say over where they end up moving. We also find that individuals who move across counties, rather than just within the same county, move to ZIP codes with 12.6 percent higher income than the ZIP code they were in prior to foreclosure (controlling for many demographic factors).

Not every crisis is the same. But the financial crisis has much to teach us about post-pandemic migration. Many of the moves we saw—often to red states and counties—were intentional ones that families made based on the deteriorating policies in their original locales. That’s a useful reminder that mobility isn’t necessarily something to be upset about.

Photo: Sirirak/iStock

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