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Policy Proposals

The mobility bank: Increasing residential mobility to boost economic mobility

October 13, 2010

The Problem

There are wide differences in unemployment based on geographic location, and workers could benefit by moving from high-unemployment areas to areas with greater demand for workers. However, the up-front costs of relocation—such as moving expenses and loss of support network—prove too heavy a burden for many, and the geographic mobility rate is at a historic low.

The Proposal

A proposed mobility bank would help individuals finance moves to areas of greater economic opportunity, with the bank offering loans, not grants, only to those who are having difficulty finding new or better employment in their local labor market. Recipients would begin repaying the loan upon finding a job, and loan repayment amounts would be capped at a percentage of total income. Furthermore, the Department of Labor should improve its efforts at enabling job seekers to expand their job searches nationally.


This paper proposes the creation of a “mobility bank” at a government cost of less than $1 billion per year to help finance the residential moves of U.S. workers relocating either to take offered jobs or to search for work, and to help them learn more about the employment options available in other parts of the country. Whereas those with college degrees and savings are much more likely to move in response to job loss and to improve their job market outcomes, those with less skills and no savings may have difficulty financing such transitions. The government should target mobility bank loans toward displaced, unemployed, and underemployed people in depressed areas of the country and should help to insure people against job-outcome uncertainty by making repayment terms contingent on the borrower’s post-move employment and income. This proposal extends government support for work-related moves that already are included in the U.S. tax code but that primarily benefit higher-income households. Calculations suggest that the benefits compare favorably with the costs from alternative federal efforts. Perhaps more importantly, our proposal helps address a persistent market failure that limits the ability of low-income families to borrow against future earnings to “invest” in job-promoting residential moves.