Esther Duflo: belief

Transcript context

…But you can move to the South, right? There’s freedom to build in the South. Plenty of people move to Texas. You won’t move to the Bay Area, but it’s a big country. Exactly so. That explains why people aren’t moving where a lot of the jobs are, if you will. But you are right. People could decide to move 200 kilometers away, not to a city but to another place that happens not to be shocked by a shock. Now there is the issue that places where you would expect most people to move from are places which have been hit by economic shock, which is often clustered in each area because industry is clustered. When a region is hit by a shock, that hits not just one company when everybody else is doing fine, but all the companies because everybody was doing furniture or clothing, or everyone was doing something that is being replaced by robots or something like that. You have an equilibrium fact that the places that are affected by the shock get hurt. Then the places that are not directly affected by the shock get hurt, too, because the guys and girls, actually, who were working are less likely to buy McDonald’s, and therefore, all the McDonald’s business goes down, et cetera, which then leads to a decline in the real estate prices. People find themselves underwater on their market. I think that prevents mobility because at least they have a house to live in if they don’t go. But if they sell that house, they have nothing to get themselves another place. So that’s the purely economic factor. Then on top of that, I think childcare is an issue because a lot of people have childcare provided by their extended family. You cannot move the entire family, again, maybe due to this list of things. The childcare options are pretty bad in this country in general, especially for small kids. Once they start going to school it’s a bit better. So those are some of the economic reasons. Then I also think there is one social reason, which is, people like to be part of a social network. I think it’s profoundly human. We are not made to be lonely. We are meant to live with our friends and derive some amount of meaning from our place in the social network. And moving makes it difficult, especially if you’re going to move to something that’s completely unknown, and you don’t exactly know what you’re moving to and why. Then finally is . . . and that’s one thing that we think we should start to put a little more in our economic model, is the fact that people are . . . It seems in surveys, people keep declaring one thing: to derive meaning from their job. But they don’t always do. And they are more likely to be deriving meaning from their job if they’ve held this job for a long time and if they’ve grown in expertise and in ranks in doing this particular job. So here, the lack of geographic mobility is coupled with the lack of sector mobility, where people aren’t just not particularly excited, or not excited at all, to leave their job making furniture to take another job 200 kilometers away being a security guard in a furniture company. Why is any of that so different from the 1980s when mobility was quite high? Even for people without children, mobility now is much lower than it was in the ’80s. What’s the difference?…

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